Lifetime value (LTV) is an important metric that can help guide your user acquisition and monetization strategy.
What is LTV?
LTV is the cumulative revenue a user generates since they installed your app. This includes revenue from in-app purchases and revenue from ads. The ads revenue is the total revenue from the AdMob Network, your bidding ad sources, and your estimated third-party revenue.
There are four types of LTV in AdMob:
- LTV: The overall LTV for a user cohort, including revenue from in-app purchases, ads, and subscriptions.
- IAP LTV:The LTV from in-app purchases for a user cohort. Note: In-app purchases (IAP) revenue is calculated post revenue share with the Google Play store and the Apple App Store.
- Ads LTV: The LTV from ads revenue for a user cohort. The ads revenue is the total revenue from the AdMob Network, your bidding ad sources, your estimated third-party revenue, and your custom events .
- Subscription LTV: The LTV from subscriptions, including renewals, for a user cohort.
How is individual LTV calculated?
LTV is the total cumulative revenue per user since they installed your app. Here’s an example calculation of LTV for User A:
(Install day D0)
In this example, User A’s D3 LTV is $5.85 (User A’s cumulative revenue since D0).
How is cohort LTV calculated?
The average LTV for a cohort is calculated by adding the cumulative revenue for each day since install and dividing it by the number of users in that cohort:
Dx LTV = (Total revenue from D0 to Dx days / Number of users that installed on D0)
Note: X is the day that you are calculating the LTV for. For example:
D3 LTV = (Total revenue of D0 + D1 + D2 + D3) / Number of users that installed on D0
Example calculation for cohort LTV
(Install day D0)
User A’s D3 LTV is $5.85(User A’s cumulative revenue since D0).
(Install day D0)
User B’s D3 LTV is $4.45. (User B’s cumulative revenue since D0).
To find the D3 LTV of the 07/01/2023 cohort, we use the following calculation:
D3 LTV of 07/01/2023 cohort = (User A D3 LTV + User B D3 LTV) / Number of installs = ($5.85 + $4.45) / 2 = $5.15
The D3 LTV for the 07/01/2023 cohort is $5.15.
How is ads LTV calculated?
Ads LTV is the total revenue from the AdMob Network, your bidding ad sources, your estimated third-party revenue, and your custom events .
- AdMob Network and bidding LTV is calculated using exact eCPM values.
- Third-party ads LTV is calculated by estimating the eCPM based on the ad source, country, ad unit, and day.
- Custom event LTV is calculated using the manual eCPM value entered for positioning the event in the mediation waterfall.
