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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.

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