Lifetime value, LTV (sometimes CLV or CLTV), is the total net revenue a customer is expected to generate over their entire relationship with a business. For iGaming it is usually expressed as expected net gaming revenue — stakes minus winnings minus bonuses and applicable costs — accumulated over a player's active lifetime.
Definition
Lifetime value, LTV (sometimes CLV or CLTV), is the total net revenue a customer is expected to generate over their entire relationship with a business. For iGaming it is usually expressed as expected net gaming revenue — stakes minus winnings minus bonuses and applicable costs — accumulated over a player's active lifetime.
LTV is the number that tells an operator or affiliate how much a customer is actually worth, and therefore how much it is rational to spend to acquire one.
LTV is a projection, not a measured fact, until a customer has fully churned, so in practice it is modelled: take the observed behaviour of comparable past cohorts, fit a curve to how cumulative value grows and flattens over time, and use it to estimate the value of current customers whose lifetimes are still running. Models range from simple (average value in the first 90 days multiplied by a factor) to sophisticated (per-player predictions from machine-learning models using early behaviour).
All of them get less reliable the further into the future they reach.
In context
LTV governs acquisition economics. If the modelled LTV of a player from a given channel is $400 and the fully-loaded cost to acquire one is $120, the channel is profitable with room to scale bids; if LTV is $150 against the same cost, it is marginal.
Operators set channel-level and campaign-level acquisition targets as a fraction of projected LTV, and the ratio of LTV to acquisition cost (often written LTV:CAC) is a headline health metric for the whole acquisition operation.
For affiliates, LTV explains the RevShare-versus-CPA choice. A CPA affiliate is effectively selling the player's LTV to the operator for a fixed price now; a RevShare affiliate keeps a share of the actual realised value as it accrues.
Which is better depends on the true LTV of the players a given traffic source produces, which is exactly what cohort analysis measures. The common mistake — on both sides — is optimising acquisition to a shallow proxy like cost per registration or cost per first deposit without checking whether those users have any LTV behind them.
Worked example
An operator models player LTV by channel from two years of cohort data. Affiliate-sourced players average a modelled $380 LTV, in-house paid social $250, and one particular affiliate's traffic $520. The operator raises that affiliate's cap and terms, holds in-house social spend flat, and sets a channel acquisition ceiling of 30% of projected LTV.
Related terms
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