Advertising and publicity are a means of marketing a product. Advertising is a means of creating awareness for a product.
Publicity is a free activity done to create awareness, while an advertisement is a paid promotion to create awareness. Advertisement includes promotion mix, while publicity includes public relations. Advertisement is controlled by the company, while publicity is controlled by a third party, which is normally the media.
Advertisement target prospective buyers of their product, while publicity just targets the public at large. Advertisement is used to build brand images, increase the sales volume and rums for a period of time, while Publicity is featured once, it is used to create goodwill and develop trust and bring out the negative and positive aspects of a product.