Today’s post tackles one of the hottest and most overlooked topics in Google Ads strategy—Custom Labels and Campaign Segmentation.
If you want to compete with the big ecommerce players—and I mean really compete—this is a topic you need to master.
Let’s dive in.
What Are Google Ads Custom Labels?
Custom labels are fields in your Google Shopping product feed that allow you to tag and group products in ways that make sense for your business. Google gives you five custom label fields to work with:
- custom_label_0
- custom_label_1
- custom_label_2
- custom_label_3
- custom_label_4
These don’t appear to customers—they’re just for internal use to help structure, organize, and optimize your campaigns with greater precision.
If you’ve read my 2022 book on Google Shopping, you’ll remember my golden rule: Campaign structure is everything.
If you’re lumping all your products into one campaign and hoping for the best, that’s like running a restaurant where filet mignon and French fries get equal pricing and attention. Not smart—and not profitable.
That’s where custom labels and campaign segmentation change the game.
5 Proven Strategies Using Custom Labels
- Segment by Profit Margin
This is the first place I usually start.
Tag products based on profitability:
- custom_label_0 = HighMargin
- custom_label_0 = MediumMargin
- custom_label_0 = LowMargin
Why it matters:
You can afford to bid higher on high-margin products because there’s more cushion. For low-margin items, you might scale back bidding—or exclude them from paid campaigns altogether and let organic search do the heavy lifting.
- Segment by Best Sellers
Have a top 10 or top 50 product list? Great—make those products work harder.
Use a label like:
- custom_label_1 = BestSeller
Put them in a dedicated campaign with higher budgets and tighter controls. Think of this campaign as your elite squad. Optimize bids, adjust titles, test new images—whatever it takes to squeeze more out of your top performers.
- Seasonality and Promotional Tags
Running sales for Black Friday? Summer clearance? Back-to-school?
Label seasonal or promo products:
- custom_label_2 = Holiday2025
- custom_label_2 = SummerSale
Now you can easily launch, pause, or adjust campaigns based on your promotional calendar—no scrambling to update feeds at the last minute.
- Inventory and Product Lifecycle
Clearance or end-of-life products? Overstock?
Use:
- custom_label_3 = Clearance
Then create a campaign with more aggressive bidding or messaging to clear that inventory out. You’ll improve cash flow and make room for new products—all while staying efficient with ad spend.
- Price Buckets
Conversion behavior varies dramatically by price point. A $10 product is a whole different beast than a $1,000 item.
Try:
- custom_label_4 = Under50
- custom_label_4 = 50to200
- custom_label_4 = Over200
This lets you analyze and optimize by price tier—so you’re not spending more to promote a $20 item than you’ll ever make in profit.
Bringing It All Together: Campaign Segmentation
Custom labels are your framework. Campaign segmentation is how you execute.
I recommend building your Shopping campaigns into three levels of priority:
- High Priority: Catch-all campaign for broad, non-branded terms
- Medium Priority: Category or product-type search terms
- Low Priority: Branded or SKU-level search terms
Use negative keywords and campaign priorities to funnel traffic appropriately. This is the priority funnel strategy I go deep into inside Make Each Click Count University—and it works.
Inside each campaign, use your custom labels to segment product groups based on margin, seasonality, bestseller status, price bucket—you name it. Now you’ve got the structure and flexibility to control bids, budgets, and messaging with laser precision.
Avoid This Common Pitfall
A mistake I see all the time? Overcomplicating your segmentation.
Keep it simple. Every custom label you use should serve a specific purpose:
- Optimize performance
- Improve reporting
- Enable faster decisions
If a label doesn’t help you do at least one of those things, it’s just clutter.
Bonus Tip: Keep Your Labels Dynamic
Use automated feed tools like:
…or even use Google Sheets and Feed Rules if you’re comfortable with manual updates.
But keep your labels fresh. Product margins change. Inventory shifts. Sales cycles move. Your labels should reflect that in real-time.
Don’t Forget to Track Performance by Custom Label
Set up your reporting (in Google Ads or Looker Studio) to break down data by label.
Ask questions like:
- Are best sellers pulling their weight?
- Am I overspending on low-margin products?
- Which price tiers convert best?
This is how you evolve from a decent Google Ads account into an elite ecommerce performer.
Final Thoughts
Google Ads isn’t about more clicks. It’s about more profitable clicks.
When you use custom labels combined with smart segmentation, you create the control and clarity needed to drive real results. I’ve used these strategies for clients selling everything from handmade soap to heavy-duty equipment—and they deliver.
Need Help with Google Ads? If you’re ready to take your online store’s performance to the next level with Google Shopping Ads but need a helping hand, consider reaching out. I’m Andy Splichal, author of Make Each Click Count and host of the Make Each Click Count podcast. Whether it’s about creating high-performing Shopping Ads or mastering your overall Google Ads strategy, I’m here to help. Let’s make those clicks count!
ABOUT THE AUTHOR
Andy Splichal is the founder and managing partner of True Online Presence, author of the Make Each Click Count book series, host of the Make Each Click Count podcast, founder of Make Each Click Count University and certified online marketing strategist with twenty plus years of experience helping companies increase their online presence and profitable revenues.
He was named to Best of Los Angeles Awards’ Most Fascinating 100 List in both 2020 and 2021. To find more information on Andy Splichal, visit trueonlinepresence.com or read The Full Story on his website or his blog, blog.trueonlinepresence.com.