Lifetime value (LTV) is an important metric that can help guide your user acquisition and monetisation strategy.
What is LTV?
LTV is the cumulative revenue that 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 three 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 and your estimated third-party revenue.
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 | 01/07/2023 (Install day D0) |
02/07/2023 (D1) | 03/07/2023 (D2) | 04/07/2023 (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).
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're 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
User A | 01/07/2023 (Install day D0) |
02/07/2023 (D1) | 03/07/2023 (D2) | 04/07/2023 (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 | 01/07/2023 (Install day D0) |
02/07/2023 (D1) | 03/07/2023 (D2) | 04/07/2023 (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 | £1.00 | £2.50 | £4.45 |
User B’s D3 LTV is £4.45. (User B’s cumulative revenue since D0).
To find the D3 LTV of the 01/07/2023 cohort, we use the following calculation:
D3 LTV of 01/07/2023 cohort = (User A D3 LTV + User B D3 LTV)/Number of installs = (£5.85 + £4.45)/2 = £5.15
Therefore, the D3 LTV for the 01/07/2023 cohort is £5.15.
How is ads LTV calculated?
Ads LTV is the total revenue from the AdMob network, your bidding ad sources and your estimated third-party revenue.
The AdMob network and bidding LTV is calculated using exact eCPM values, while third-party ads LTV is calculated by estimating the eCPM based on the ad source, country, ad unit and day.