The Strategic Guide to Google Custom Labels for Smarter Bidding

In the competitive arena of Google Shopping, gaining an edge often comes down to one thing: data. While every advertiser has access to standard product attributes like brand, category, and condition, the most successful ones leverage a powerful, often underutilized feature to outmaneuver the competition. We're talking about Google custom labels.

If you've ever felt limited by Google's default product groupings or wished you could bid on products based on your own internal business metrics, then this guide is for you. Custom labels are the key to unlocking a new level of granularity and strategic control over your Shopping and Performance Max campaigns. They transform your product feed from a simple inventory list into a dynamic tool for intelligent bidding and deeper performance analysis.

In this comprehensive guide, we'll explore what Google custom labels are, why they are indispensable for serious advertisers, and how you can implement them strategically to drive profitability and campaign efficiency.

What Exactly Are Google Custom Labels?

At their core, Google custom labels are five optional attributes you can add to your product feed, named custom_label_0 through custom_label_4. Unlike standard attributes such as color, size, or gtin, which have predefined purposes, custom labels are blank slates. You, the advertiser, define their meaning and assign their values.

Think of them as personalized tags or categories that you can apply to your products based on any criteria you choose. This data is not visible to shoppers on the front end; its sole purpose is for you to organize and segment your product groups within your Google Ads campaigns. This simple yet powerful flexibility allows you to structure your campaigns around the metrics that truly matter to your business—like profitability, seasonality, or sales performance.

Why You Can't Afford to Ignore Custom Labels

Relying solely on standard attributes like 'Brand' or 'Product Type' for campaign structure is like trying to navigate a new city with a map that only shows major highways. You'll get around, but you'll miss all the efficient side streets and shortcuts. Custom labels are those shortcuts, providing a much richer, more detailed map of your product catalog.

Granular Campaign Segmentation

The primary benefit of using custom labels is the ability to achieve hyper-granular campaign segmentation. You can group products in ways that Google's standard categories simply don't allow. Want to group all your high-margin products together, regardless of their brand or category? A custom label can do that. Need to isolate products that are part of a flash sale? A custom label is the perfect tool.

Enhanced Bidding Strategies

This granular segmentation directly fuels smarter bidding. By creating product groups based on your custom labels, you can set specific bids that align with each segment's value to your business. For example, you can bid more aggressively on "best-sellers" or "high-margin" items and more conservatively on "clearance" or "low-margin" products. This ensures your ad spend is allocated most effectively, maximizing your return on ad spend (ROAS).

Deeper Performance Insights

When you segment your campaigns using Google custom labels, your reporting becomes significantly more insightful. Instead of just seeing performance by brand, you can analyze performance by profit margin, seasonality, or any other custom attribute you've created. This allows you to answer critical business questions like: "Are my high-margin products converting as well as my low-margin ones?" or "How did my 'Winter Collection' perform compared to my 'Summer Essentials'?"

Strategic Ways to Use Google Custom Labels

The real power of custom labels is unleashed when you apply them strategically. The possibilities are nearly endless, but here are some of the most effective and popular strategies used by savvy e-commerce professionals.

Strategy 1: Segment by Profit Margin or ROAS Tiers

This is arguably the most powerful strategy. Not all sales are created equal. A $100 sale with a 70% profit margin is far more valuable than a $100 sale with a 10% margin. By enriching your feed with margin data, you can bid based on profitability, not just revenue.

• custom_label_0: "High-Margin"
• custom_label_0: "Medium-Margin"
• custom_label_0: "Low-Margin"

With these labels, you can create separate campaigns or ad groups to bid much more aggressively on your most profitable products, ensuring they get maximum visibility.

Strategy 2: Identify Product Performance Tiers

Use your own sales data to classify products based on their performance. This allows you to push your winners and manage inventory for slower-moving items.

• custom_label_1: "Best-Seller"
• custom_label_1: "Consistent-Seller"
• custom_label_1: "Slow-Mover"
• custom_label_1: "New-Arrival"

You can allocate more budget to "Best-Seller" campaigns, use a lower-bid strategy for "Slow-Movers" to liquidate stock without overspending, and give "New-Arrivals" a dedicated budget to gather initial performance data.

Strategy 3: Categorize by Seasonality or Events

This strategy is essential for businesses with seasonal product catalogs or those who run frequent promotions. It allows you to easily activate and push specific product groups during key sales periods.

• custom_label_2: "Winter-Collection"
• custom_label_2: "Back-to-School"
• custom_label_2: "Black-Friday-Deal"
• custom_label_2: "Mothers-Day-Gift"

When a specific season or event arrives, you can instantly increase bids for the corresponding product group without having to manually find and adjust hundreds of individual products.

Strategy 4: Segment by Price Buckets

The price of a product often correlates with its conversion cycle and expected ROAS. Segmenting by price allows you to tailor your bidding approach accordingly.

• custom_label_3: "Under-50"
• custom_label_3: "50-to-150"
• custom_label_3: "Over-150"

You might accept a lower ROAS target for high-ticket items ("Over-150") because their total profit is still significant, while demanding a very high ROAS for low-priced items ("Under-50") to ensure profitability after ad spend.

Strategy 5: Group by Promotions or Shipping Attributes

Highlighting special offers or logistical advantages can be a powerful lever. Use a custom label to group products that have a unique selling proposition.

• custom_label_4: "On-Sale"
• custom_label_4: "Free-Shipping"
• custom_label_4: "BOGO-Deal"

This allows you to create dedicated campaigns for promotional items, ensuring they get the visibility they need during a sale. It also helps in reporting to measure the true impact of your promotions.

How to Implement Google Custom Labels in Your Feed

Implementing custom labels involves a few key steps, from strategy to execution. Here’s a practical workflow:

1. Define Your Strategy: Before touching your feed, decide what you want to achieve. Review the strategies above and determine which are most relevant to your business goals. Start with one or two labels to keep things manageable.
2. Gather Your Data: Your custom label values need to come from somewhere. This data might live in your e-commerce platform, an ERP system, or even a separate spreadsheet. For example, to create a "Profit-Margin" label, you first need to have the margin data for each product.
3. Assign Values in Your Feed: This is the technical step. You need to map your strategic data to the custom_label_0 - custom_label_4 attributes in your product feed file. There are two primary ways to do this:
   • Manual Assignment: For smaller catalogs, you can manually add a new column for `custom_label_0` to your source spreadsheet (e.g., Google Sheets) and fill in the values for each product.
   • Automated Rules with a Feed Management Tool: This is the most efficient and scalable method. A platform like Feedance allows you to create powerful "if-then" rules to populate your custom labels automatically. For example: IF 'price' is greater than 200, THEN set 'custom_label_3' to "High-Ticket". This dynamic approach ensures your labels are always up-to-date as your product data changes.
4. Upload and Verify: After updating your feed, upload it to Google Merchant Center. Once processed, you can navigate to your Google Ads account. When subdividing your product groups in a Shopping or Performance Max campaign, you will now see "Custom label 0" (and others) as an option for segmentation.

Best Practices and Pitfalls to Avoid

To get the most out of your Google custom labels, keep these best practices in mind:

• Stay Consistent: Use a consistent naming convention for your label values (e.g., use "High-Margin" every time, not "high margin" or "High Margin"). This keeps your campaign structure clean.
• Keep a Legend: Document what each custom label and its values mean. This is crucial for team collaboration and for remembering your setup months later.
• Don't Over-Segment: While granularity is good, creating too many product groups can spread your data too thin, making it difficult for both you and Google's algorithms to make statistically significant decisions. Aim for meaningful segments that will accumulate sufficient data.
• Use Standard Attributes First: Don't use a custom label for information that has a dedicated standard attribute. For example, use the `color` attribute for color, not `custom_label_0`. Custom labels are for data that doesn't fit anywhere else.
• Automate for Accuracy: Product attributes change. A "New-Arrival" becomes a "Consistent-Seller." Prices and margins fluctuate. Using a feed management tool to automate your custom label assignments based on rules ensures your segmentation remains accurate and relevant without constant manual work.

Google custom labels are far more than just extra columns in a spreadsheet; they are the bridge between your raw product data and your high-level business strategy. By moving beyond default attributes and segmenting your products based on performance, profitability, and promotions, you gain unparalleled control over your bidding and budgeting.

Implementing a thoughtful custom label strategy empowers you to make smarter, data-driven decisions that directly impact your bottom line. It allows you to invest your ad spend with precision, pushing the products that matter most and optimizing your campaigns for true profitability. Start by identifying one key metric you wish you could bid on—be it margin, seasonality, or sales velocity—and build your first custom label. It’s a strategic step that will pay dividends in campaign performance and business growth.