Understand lifetime value

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:

User A		07/01/2023 (Install day D0)	07/02/2023 (D1)	07/03/2023 (D2)	07/04/2023 (D3)
	Ads revenue	$0.10	$0.50	$1.50	$0.75
	IAP	$0	$1.00	$1.00	$1.00
	Total revenue per day	$0.10	$1.50	$2.50	$1.75
	LTV	$0.10	$1.60	$4.10	$5.85

In this example, User A’s D3 LTV is $5.85 (User A’s cumulative revenue since D0).

Note: The AdMob Cohort report does not include individual LTVs, instead showing a cohort LTV.

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

Assume User A and B are the only users that installed your app on 07/01/2023 (D0). This means that they’re the only users in this cohort.

User A		07/01/2023 (Install day D0)	07/02/2023 (D1)	07/03/2023 (D2)	07/04/2023 (D3)
	Ads revenue	$0.10	$0.50	$1.50	$0.75
	IAP	$0	$1.00	$1.00	$1.00
	Total revenue per day	$0.10	$1.50	$2.50	$1.75
	LTV	$0.10	$1.60	$4.10	$5.85

User A’s D3 LTV is $5.85 (User A’s cumulative revenue since D0). 

User B		07/01/2023 (Install day D0)	07/02/2023 (D1)	07/03/2023 (D2)	07/04/2023 (D3)
	Ads revenue	$0.20	$0.25	$0.50	$0.75
	IAP	$0	$0.75	$1.00	$1.00
	Total revenue per day	$0.20	$1.00	$1.50	$1.75
	LTV	$0.20	$1.20	$2.70	$4.45

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.