Metric
Customer lifetime value is the total profit a customer brings over the whole relationship — not just the first sale. It's the number that answers "how much can I afford to spend on ads?" and it quietly governs every other metric in your account.
A workable formula: LTV = average order value × purchase frequency × lifespan × gross margin. A customer spending $60 per order, four times a year, for two years, at 50% margin is worth roughly $240. Subscription models often use average revenue per user divided by churn rate instead.
The reason LTV matters for ads is the LTV:CAC ratio. A healthy target is about 3:1. The higher your LTV, the more you can afford to pay to acquire a customer — so a business with strong retention can outbid competitors on CPA and still profit. Raising LTV often unlocks more growth than cutting ad costs ever could.
A high LTV buys you tolerance: you can accept a pricier click or a lower first-order ROAS because the customer pays you back over time. But none of that matters if the ad never earns attention in the first place. LTV decides how much you can spend; the creative decides whether that spend does anything.
With more room to acquire, the constraint shifts back to the creative — which ad actually holds attention and converts. Predicting that before you spend is how you turn LTV headroom into growth instead of waste. See ad pre-testing.
Score your creative for attention before you spend. First analysis free.
Score Your AdLTV — customer lifetime value — is the total gross profit a customer generates over their entire relationship with you. It answers 'what is a customer actually worth?' and sets the ceiling on how much you can spend to acquire one.
A simple version: LTV = average order value × purchase frequency × customer lifespan × gross margin. A customer who spends $60 per order, buys four times a year, stays two years, at 50% margin is worth about $240 in LTV. Subscription businesses often use average revenue per user ÷ churn rate.
LTV sets how much you can afford to pay for a customer. A high LTV lets you outbid competitors on CAC and still profit, so raising LTV is often a bigger lever than cutting ad costs. The healthy target is an LTV:CAC ratio around 3:1.