Luck vs. Skill in Advertising: How to Improve Your Outcomes

If you knew in advance the outcome of every decision, wouldn’t you be unstoppable?

We are constantly bombarded by visions of success. It is usually presented as easy, effortless and predetermined by someone’s wisdom (or hard work). A clever sales pitch often follows, with the message that you could achieve the same results “if only you do ABC“. Sometimes this message is subtle, sometimes very blatant.

I am not going to discount the massive motivational value of celebrating big successes. But it is even more important to “unpack” them to understand what part of them is related to capabilities (which could be replicated) vs. circumstances (which are a completely different story).

So, let’s break it down with some examples.

The Skills: Definition

We can define “skills” as ability to complete a task that can be predictably learned and replicated. Starting a car. Making coffee. Creating a web page. Booking an ad. Performing keyword research. Interviewing a customer. Those are the simplest examples, but more sophisticated skills and processes can be learned as well. Whether we are talking about playing a piano, or cold-calling with a sales script, or implementing a cutting-edge customer journey assessment & redesign.

Applying skills takes a commitment and a work ethic, but is within our control (resources permitting). Yet, if only skills determined outcomes, we would never hear about “known knowns” vs “unknown unknows”.

The Luck: Definition

Let us define “luck” as the combination of all factors outside of our control. The weather. The chance you are dealt the top poker hand. The average CPM on Facebook. The quality of the leads you bought (or generated). The chance of finding your “Blue Ocean Strategy“, that would pan out. The chance that your market will grow or bomb. The list goes on, but it is important to note that increased “skill” could greatly reduce exposure to “luck”. If you know where to look for something, you face better odds of finding it.

If you understand basic risk management, you could implement processes to ride out predictable fluctuations, like good poker players do. But you’ll be still vulnerable to an unpredictable “Black Swan event“.

Skills vs. Luck Matrix

The best way to understand the interplay between skill and luck is to plot the high/low scenarios on a matrix with 4 quadrants. Then we can assign a compelling visual and tell a story about each of the quadrants. Keep in mind, that skill/luck quadrants could be interpreted differently for frequent low-cost decisions (e.g. “try this ad creative“) vs. rare high-cost decisions (e.g. “invest X time and Y money into testing market Z“).

The lower the cost of a decision, the easier it is to “ride out” your luck by using a system. But with truly big decisions, about your strategic investments, at the end of the day your “luck” will play the outsize role.

Can You Place Each of Your Projects in the Right Quadrant?

Low-Skill, Low-Luck: “Admiral Ozzel”

If you are a Star Wars fan, you probably remember Admiral Ozzel from the beginning of The Empire Strikes Back. The ill-fated Imperial officer first tries to dismiss an intelligence report (just like unsophisticated advertisers do 🙂 ), and after being overruled by Darth Vader bungles the hyperspace jump to alert the Rebels to an incoming attack. This compounded incompetence is the last straw for Darth Vader who promptly strangles and replaces the unlucky Admiral. Moral of the story: if you really screw up, the chances of being bailed out by pure luck are slim.

Ever had a boss like Admiral Ozzel? An even scarier thought, does he remind you of yourself now and then? The first step to solving a problem is admitting you have a problem. Build up your skills or your extended team.

Low-Skill, High-Luck: “Lottery Winners”

Not every screw-up leads to a disaster. Occasionally the stars align and the factors outside our control deliver a win on a silver platter. The “success” might be completely unrelated to the conscious effort or could even happen despite it. Winning a lottery is the easiest to understand example. In advertising it could mean that your random choice of ad creative and ad targeting delivers a profitable campaign on the first try. Now, look at any big success story. Are you sure it didn’t rely on some stroke of luck buried under the surface of the public image?

Don’t rely on luck! In advertising, you should not set any expectations when running a brand new test. Expect to find what really works by continuous iteration, but understand that nothing is predestined.

High-Skill, Low-Luck: “Captain Sully”

What do we say happens to the “best laid plans“? We could be doing everything right, up to the professional gold standard and still strike out. When Flight 1549 struck a flock of geese and lost both engines, we didn’t pin the blame on the pilot. Instead, Captain Sully showed his extraordinary ability by landing the engine-less plane on the water. This is a great example of how outstanding skill could soften the blow of chance, but there was nothing a pilot could have done to prevent a force majeure or a “Black Swan“.

This is the toughest quadrant to accept and manage. The best we can do is build up the skills, apply them consistently and hedge our risks, as much as we can. When disaster strikes, perhaps you could “pull a Sully”.

High-Skill, High-Luck: “The Ironman”

This is where you hope to end up if you build up the capabilities and invest the effort. Tony “The Ironman” Stark is a brilliant inventor who parlayed his (doubtless) genius into a massive fortune. Surely that’s all there is to it? I mean it wouldn’t require any luck to time the invention perfectly, land some defense contracts and then lock out all competition? If Elon Musk could launch a satellite internet system, why couldn’t you? Sure, just make 9 figures in the dot-com bubble while in your early 20s, then use it as “play money” to experiment with rockets for years, and then invest enough in politics to get tax breaks, subsidies and contracts from Uncle Sam. Easy-peasy!

There is great danger in discounting the “luck” factor when you try to learn from highly public successes. Clients often say things like “I want to do it this way, because competitor XYZ is doing it“. In most cases, a closer look shows that the case study in question could attribute success to a dozen other factors and the thing you are looking to copy could actually be dragging them down.

The Takeways

Understand the interplay of skill and luck in achieving success
Maximize your chance of success by learning or hiring the skills
Improve your luck by riding out fluctuations with a thorough process
Don’t blindly follow what competitors or “gurus” are doing
Accept that there are always factors outside of our control

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Dmitriy Kruglyak

President at TargetChoice LLC

Data Geek. Process Fanatic. Growth Hacker

Making Advertising Profitable for Businesses

Building Marketing Tech since 1998