Google Shopping has seen tremendous developments over this past year with the release of many new features, all of which require a solid understanding and savvy use of product segmentation and custom labels.

Smart marketers will do well to keep up-to-date with all these changes in order to make the most of their Google Shopping campaigns and keep their online advertising competitive.  In this article, we’ll discuss what custom labels are, why they’re so important, and how to optimize their use for your campaigns.

First, what changes has Google made?

In September 2017, Google launched supplemental feeds, which allow marketers to include additional data connected to an existing product feed.

Then by February 2018, there was a major update to feed rules, and Google started displaying ads from competing shopping engines.

Within just the past few months, Google has launched goal-optimized shopping campaigns (a.k.a. universal shopping campaigns), adding more automation and machine-learning to the newly rebranded Google Ads. This is in addition to Google’s new Shopping Actions program, which makes it simple and frictionless for customers to shop across Google’s platforms from multiple devices.

Online advertisers need to know that in order to make full use of these new feature and optimize their Google Shopping campaigns, they need to understand and use custom labels.


What are custom labels?

If you think of your product feed as a spreadsheet displaying the products you are advertising and their corresponding attributes, you can see that Google Shopping allows you to organize product groups based on common categories, such as product type, identification number, condition, brand etc.

However, if you would prefer to organize your product groups based on another attribute of your own choosing, you can do this through custom labels.

According to Google, before you begin using custom labels for your campaigns, you’ll first need to have access to your product data in Google Merchant Center and be prepared to add custom label attributes to your available products.

There are five custom label columns available for each product numbered 0 through 4. You can use any to all of these, and the values you choose for each column are totally up to you.  As of now, Google has no specific rules or requirements for the values of your custom labels.

Ultimately, custom labels give you more options for your Google Shopping bidding strategies. If you add custom labels for each product you advertise, you can segment the biddings for your product listing ads (PLAs) and create campaigns that are more highly targeted.

Other attributes in your product feed will be tied to a specific product and will have to be the same as what is shown on the website.  But custom labels can be any segmentation strategy you can imagine and change as frequently as you desire, as their value shows only in your Google Ads account.



Why use custom labels?

Consider the following scenario: imagine you are an e-commerce business with over a hundred thousand products in your catalog, some of which will be going on sale for the back-to-school season at a certain discount, within a specified date range, with free shipping etc.

You obviously have too many products to manage them effectively through Excel or some equivalent, so you hire a developer to generate a product feed for you, creating all the mandatory basic attributes for your feed.

But, you also want to create special, temporary attribute fields for your special on-sale products to maximize the potential of the limited time sale.  And you want to be able to do so quickly and easily. This is one of the best, most common reasons to use custom labels.

Now that we’ve got the basic idea, let’s look deeper at the three main ways custom labels help optimize your Google Shopping campaigns:

1. Product Segmentation

One of the longstanding challenges of advertising with Google Shopping has been the fact that, unlike text ads, it hasn’t been possible to target by keyword.

Without keyword targeting, it has been hard to establish strategic bids for different search terms, because you have had to rely on Google to match your products with the relevant keywords. If you’re the business owner and/or marketer, obviously you want more control over your own account. You don’t want to be bidding the same on two queries where the consumer intent is clearly different. That’s just a waste of precious budget money on an unlikely conversion.

Once you have a product feed featuring tens of thousands of different unique products or more, Google Shopping campaigns can quickly become unwieldy, disorganized, and difficult to manage.

The solution is product segmentation, the process by which you can subdivide your products into categories of your own choosing according to predefined values which you will set as custom labels.

Some popular product segmentation categories using custom labels are:

  • Seasonal
  • On Sale / Clearance
  • Shipping Deals
  • Margin
  • Color / Gender / Size
  • Best-Sellers

Product segmentation gives you more control by allowing you to group together products and manage them separately.  For example, maybe one thousand of your tens of thousands of products have been selling consistently, demonstrating that they are your “best-sellers.” You will want to be able to easily and quickly manage just these products and push them more than your more-difficult-to-sell items, giving the best-sellers as much impression share as possible since they will be more likely to convert.

You could potentially segment your best-seller group by item ID, but that’s likely to take up lots of valuable time and be hard to manage efficiently.  By creating a custom label, you not only eliminate the complexity, you also create an opportunity for further segmentation – for example by a lower cost-per-action (CPA) or higher return on investment (ROI) – making your overall bidding more strategic.

2. Analytics

Once you have your products segmented, you will be able to access reports at a product group level. With multiple product groups, it becomes much easier to see and track their performances.

Although you can access reporting at a product level through Google Ads, this method is again messy and inefficient for large product feeds. For better analytics, you will want reports at the product group level.

3. Testing

The most important advantage of analyzing performance at the product group level is that it will allow you to systematically run A/B tests of one segment’s performance against another.

For example, you could test the effectiveness of a free shipping promotion by segmenting the products with free shipping and the products with normal shipping and running an experiment to see how they each perform.



Examples of Best Practices Using Custom Labels in Google Shopping

Now that you understand how custom labels can help to optimize your Google Shopping campaigns, let’s look at some specific examples of best practices using custom labels that have helped advertisers boost their revenue streams:

● Margin

Some of your products will give you greater gross profits on each sale, for example a $40 product with a 30% gross margin will generate greater profits than a $45 product with a 20% gross profit margin.

Using custom labels, you can bid more aggressively based on product margin as a strategy to increase your overall profits.

● Push

If you have new products or certain items that you want to gain greater visibility, you can create a custom label to drive exposure for a specific time period. Maybe you’ve just launched the latest version of a popular product, or maybe you want to create a three-month campaign around an old product that once again is in season.

With custom labels, you can segment the products you want to push and increase your bidding to drive more clicks.

● Desired Characteristics

You may that find one of your products, for example, sells better in rose pink than in black.  Or in sizes medium and large, rather than any other sizes.

If you know that a certain product option (like color, size, gender, age, brand name, etc.) is more likely to convert, you can create custom labels to segment those products for higher bids.

● Lots of Clicks, Little Conversion

You also may find that certain products generate many clicks but don’t result in actual sales. There may be an issue in your marketing funnel, but it may just be a factor of a certain product that it will generate more clicks from non-buyers than other kinds of products.

If so, you may want to segment these high CTR/low conversion products into their own category and bid lower on them.

By utilizing product segmentation properly, it can help simplify overall campaign management and improve the performance of your campaigns. Product segmentation also help track performance goals on a more granular level.

Today’s online advertisers know how important Google Shopping developments are to their business success. If you’re looking for more reasons to invest your efforts in Google Shopping, you may want to read up on the biggest benefits of Google Shopping ads.


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