Google Shopping Custom Labels: Complete Setup & Strategy Guide

Custom labels are one of the most powerful—and underused—features in Google Shopping. While most advertisers rely on product type or brand for campaign structure, custom labels let you segment products based on your own business logic: profit margins, performance history, seasonality, or any attribute that matters to your strategy.

This guide covers everything you need to know about custom labels: what they are, how to set them up in Google Merchant Center, strategic frameworks for using them, and best practices to avoid common mistakes.

What Are Custom Labels in Google Shopping?

Custom labels are five optional feed attributes (custom_label_0 through custom_label_4) that let you tag products with values you define. Unlike standard attributes like brand or product type, Google doesn't prescribe what custom labels should contain—you decide based on your business needs.

Once products are labeled in your feed, you can use these labels in Google Ads to:

• Create product groups within campaigns for granular bidding
• Separate campaigns by business priority or strategy
• Apply different budgets to different product segments
• Generate reports filtered by custom attributes (see the API segments guide for advanced reporting)
• Build remarketing audiences based on product characteristics

Understanding the 5 Custom Label Slots

Google Merchant Center provides exactly five custom label attributes. Each has identical functionality—the numbering (0-4) is arbitrary, so you can assign any meaning you want to any slot.

Attribute	Max Length	Format
custom_label_0	100 characters	Text (case-sensitive)
custom_label_1	100 characters	Text (case-sensitive)
custom_label_2	100 characters	Text (case-sensitive)
custom_label_3	100 characters	Text (case-sensitive)
custom_label_4	100 characters	Text (case-sensitive)

Important notes:

• Labels are case-sensitive: "Bestseller" and "bestseller" are different values
• Each product can have one value per label—you can't assign multiple values to custom_label_0
• Labels are optional—products without a value for a label will group under "no value" in Google Ads
• Labels don't affect ad serving—they're purely for organization and bidding

Strategic Framework: How to Use Each Label

The best custom label strategies use labels consistently across your catalog. Here's a proven framework that works for most e-commerce businesses:

Label 0: Profit Margin Tier

Your most important segmentation. Products with high margins can afford higher bids and lower ROAS targets; low-margin products need stricter efficiency.

Value	Criteria	Bidding Implication
High_Margin	Gross margin > 50%	Bid aggressively, accept lower ROAS
Medium_Margin	Gross margin 25-50%	Standard bidding, target ROAS
Low_Margin	Gross margin < 25%	Conservative bids, strict ROAS targets

Label 1: Historical Performance

Segment by how products have performed historically. Top performers deserve budget protection; underperformers need different treatment.

Value	Criteria	Strategy
Bestseller	Top 20% by revenue (last 90 days)	Maximize impression share
Core	Middle 60% by revenue	Optimize for efficiency
Long_Tail	Bottom 20% or new products	Test with limited budget
Underperformer	Negative ROI over 60+ days	Exclude or minimal bids

Label 2: Seasonality

Tag products by when they're most relevant. This lets you quickly adjust budgets and bids as seasons change, which is especially important when planning your budget allocation strategy.

• Spring: Gardening, outdoor furniture, allergy products
• Summer: Swimwear, fans, outdoor recreation
• Fall: Back-to-school, Halloween, early holiday prep
• Winter: Holiday gifts, cold weather gear, indoor items
• Evergreen: Year-round demand products

Label 3: Price Point

Different price points often require different bidding strategies. High-ticket items have longer consideration cycles; budget items are impulse purchases.

• Premium: $200+ (consider remarketing focus)
• Mid_Range: $50-199 (balanced approach)
• Budget: Under $50 (volume-focused)

Label 4: Promotional Status

Track which products are on promotion to adjust bids accordingly. Products on sale often convert better and can justify higher bids temporarily.

• On_Sale: Currently discounted
• Clearance: End-of-life, deep discounts
• Full_Price: No current promotion
• New_Arrival: Recently launched (may need awareness push)

How to Set Up Custom Labels in Merchant Center

Custom labels are added to your product feed, not configured in Merchant Center's UI. The method depends on how you manage your feed.

Method 1: Spreadsheet/CSV Feed

If you upload a spreadsheet or CSV file:

1. Add columns named custom_label_0, custom_label_1, etc.
2. Populate each product row with the appropriate values
3. Upload your updated feed to Merchant Center

Example spreadsheet structure:

id	title	custom_label_0	custom_label_1
SKU-001	Running Shoes Pro	High_Margin	Bestseller
SKU-002	Basic T-Shirt	Low_Margin	Core
SKU-003	Winter Jacket	Medium_Margin	Long_Tail

Method 2: Merchant Center Feed Rules

Feed rules let you dynamically assign labels based on other product attributes—without modifying your source feed.

1. In Merchant Center, go to Products > Feeds > Feed Rules
2. Click the + button to add a new rule
3. Select custom_label_0 (or another label) as the target attribute
4. Create conditions based on other attributes

Example feed rules:

• IF price > 200 THEN set custom_label_3 = "Premium"
• IF sale_price exists THEN set custom_label_4 = "On_Sale"
• IF brand = "Nike" THEN set custom_label_0 = "High_Margin"

Feed rules are powerful for attributes you can derive from existing feed data. For business-specific labels (like performance tier), you'll need to manage them in your source system.

Method 3: Content API

If you use the Content API for Shopping, include custom labels in your product data:

{
  "offerId": "SKU-001",
  "title": "Running Shoes Pro",
  "customLabel0": "High_Margin",
  "customLabel1": "Bestseller",
  "customLabel2": "Evergreen",
  "customLabel3": "Premium",
  "customLabel4": "Full_Price"
}

Using Custom Labels in Google Ads Campaigns

Once your feed includes custom labels, you can use them to structure campaigns and product groups.

Option 1: Separate Campaigns by Label

Create separate campaigns for major segments, giving each its own budget allocation and strategy:

• Campaign: Bestsellers - Filter: custom_label_1 = "Bestseller"
• Campaign: Core Products - Filter: custom_label_1 = "Core"
• Campaign: Long Tail - Filter: custom_label_1 = "Long_Tail"

This approach works well when segments need completely different budgets or bid strategies.

Option 2: Product Groups Within Campaigns

Within a single campaign, subdivide by custom labels for granular bidding:

1. In your Shopping campaign, go to Product groups
2. Click the + icon to subdivide
3. Select Custom label 0 (or another label) as the subdivision
4. Set different bids for each label value

You can create nested subdivisions—for example, first by custom_label_0 (margin), then by custom_label_1 (performance) within each margin tier.

Custom Labels in Performance Max

Performance Max campaigns also support custom labels. Use them to create listing groups within asset groups:

1. In your Performance Max campaign, go to Asset groups
2. Click Edit listing group
3. Subdivide by Custom label
4. Assign different assets or exclude certain label values

Real-World Custom Label Examples

Example 1: Fashion Retailer

Label	Purpose	Values
Label 0	Collection	SS26, FW25, Basics, Sale
Label 1	Inventory Status	Full_Stock, Low_Stock, Last_Sizes
Label 2	Margin	Private_Label, Branded, Outlet
Label 3	Gender Focus	Womens, Mens, Unisex, Kids
Label 4	Photography	Lifestyle, Studio, UGC

Example 2: Electronics Store

Label	Purpose	Values
Label 0	Product Lifecycle	New_Launch, Current, End_Of_Life
Label 1	Price vs Competition	Best_Price, Competitive, Above_Market
Label 2	Return Rate	Low_Returns, Average, High_Returns
Label 3	Attachment Rate	High_Attach, Low_Attach, Accessory
Label 4	Supplier	Direct, Distributor_A, Distributor_B

Example 3: Home & Garden

Label	Purpose	Values
Label 0	Shipping Tier	Free_Ship, Flat_Rate, Freight
Label 1	Seasonality	Spring_Garden, Summer_Outdoor, Winter_Indoor
Label 2	ROAS History	Hero, Profitable, Break_Even, Unprofitable
Label 3	Assembly	Ready_To_Use, Easy_Assembly, Complex
Label 4	Promo Calendar	Memorial_Day, July_4th, Labor_Day, Black_Friday

Custom Label Best Practices

1. Use Consistent Naming Conventions

Establish standards and stick to them:

• Use underscores or hyphens, not spaces: High_Margin not High Margin
• Be consistent with capitalization (remember, labels are case-sensitive)
• Keep values short but descriptive
• Document your label schema for your team

2. Limit Values Per Label

Each label should have 3-7 distinct values. Too many values creates unmanageable product groups:

• Good: High_Margin, Medium_Margin, Low_Margin (3 values)
• Too granular: 60%_Margin, 55%_Margin, 50%_Margin... (dozens of values)

3. Update Labels Regularly

Static labels lose value. Schedule regular updates:

• Weekly: Promotional status, inventory levels
• Monthly: Performance tiers (recalculate based on recent data)
• Quarterly: Margin tiers, seasonality assignments

Tools like SKU Analyzer can help you identify which products have changed performance tiers by showing historical trends and current metrics side by side, making label updates more data-driven.

4. Don't Change Labels Frequently

While updates are important, too-frequent changes cause problems:

• Products move between product groups, disrupting bid optimization
• Historical data becomes fragmented
• Smart Bidding algorithms need time to learn

Update labels on a schedule, not daily.

5. Always Have a Catch-All

Products without a label value group under "no value" in Google Ads. This is fine, but make sure you:

• Set appropriate bids for the catch-all group
• Regularly check which products fall into it
• Don't accidentally exclude products by having overly strict filters

Common Custom Label Mistakes to Avoid

Mistake 1: Using Labels for Standard Attributes

Don't use custom labels for information already available in standard feed attributes. Brand, product type, and Google product category already exist—using labels for these wastes slots.

Wrong: custom_label_0 = "Nike" (use the brand attribute instead)
Right: custom_label_0 = "High_Margin" (business logic not in standard attributes)

Mistake 2: Creating Too Many Values

With 50 unique values in a label, you'll have 50 product groups—impossible to manage effectively. Consolidate into meaningful tiers.

Mistake 3: Set-and-Forget Labels

A product labeled "Bestseller" 6 months ago may now be a laggard. Stale labels lead to misallocated budgets.

Mistake 4: Inconsistent Capitalization

"High_Margin" and "high_margin" create two separate product groups. Audit your feed for inconsistencies.

Mistake 5: Not Documenting Your Schema

When team members change or time passes, undocumented labels become confusing. Create a simple reference document explaining what each label means and what values it can contain.

Frequently Asked Questions

Conclusion

Custom labels transform Google Shopping from a one-size-fits-all channel into a precision tool for your specific business. By segmenting products based on margin, performance, seasonality, and other business logic, you can:

• Allocate budget smarter: Prioritize high-margin bestsellers, limit spend on low performers
• Bid with purpose: Different products deserve different strategies
• React faster: Quickly adjust entire segments as business conditions change
• Report meaningfully: Analyze performance by segments that matter to your business

Start with two or three labels addressing your most important segmentation needs. As you get comfortable, add more labels to refine your strategy. Document your schema, update labels regularly, and use the resulting structure to make every advertising dollar work harder. For businesses just getting started with Shopping, our small business guide covers how to use labels effectively even with limited budgets.

The advertisers winning in Google Shopping aren't just optimizing bids—they're optimizing which products get which bids. Custom labels are how you make that happen. For more on structuring your Google Shopping approach, explore Google's official Ads & Commerce blog for the latest updates and best practices.