Metrics
LTV (Customer Lifetime Value)
Customer lifetime value is the total revenue or profit a customer is expected to generate over the whole relationship, not just the first purchase.
In practice
Ad platforms measure the first conversion. Businesses live on the ones after it. A consumable product, a subscription, a service with repeat visits, or a B2B account with renewals is worth far more than its first order, and an advertiser who bids only on first-order economics will be outbid by one who understands LTV.
The practical use is setting targets. If a first order breaks even at a 3x ROAS but the average customer buys three more times, a 2x first-order ROAS is profitable and a campaign held to 3x is leaving growth behind. The same logic applies to cost per lead against lifetime client value in services.
LTV should come from your own order or CRM data, segmented where possible by acquisition channel and first product, because customers acquired through different campaigns often behave differently. We report ROAS as the account reports it and let the LTV conversation set the targets, not the reporting.
Why it matters
It is the difference between bidding to break even on a sale and bidding to win a customer.
RELATED TERMS
AOV (Average Order Value)
Average order value is total revenue divided by the number of orders over a period, showing how much a typical customer spends per transaction.
ROAS (Return on Ad Spend)
ROAS is revenue attributed to advertising divided by the cost of that advertising, expressed as a multiple such as 5x or a percentage such as 500%.
CPA (Cost Per Acquisition)
Cost per acquisition is total ad spend divided by the number of conversions, giving the average cost to produce one defined outcome such as a sale, lead, or sign-up.
Written by Ilya Bulychev, Founder, Live PPC Ads. Part of the PPC Glossary.
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