Lifetime Value (LTV) is a crucial metric used to predict the average revenue generated by an individual app user or customer over their entire lifetime. It offers insights into user profitability and informs marketers about the effectiveness of their user acquisition strategies.
The calculation of LTV varies depending on the app’s payment model, whether it’s paid, ad-supported, or subscription-based. By understanding the user’s lifetime value and acquisition cost, marketers can determine the time required to recover upfront advertising expenses and forecast the expected profit from each customer over their lifetime.
Successfully predicting LTV enables marketers to optimize their advertising spending, make informed decisions, and scale their marketing budgets effectively. Users with high LTV typically demonstrate strong retention rates, actively contribute to app revenue, and play a crucial role in overall success.
