The short answer
Google Shopping custom labels let you group products by business logic that Google does not automatically know, such as margin, stock, seasonality, clearance status, price band, or priority.
They are useful because Shopping optimisation should not treat every product as commercially equal.
What custom labels are for
Custom labels are optional feed fields. You decide what they mean, then use them for campaign structure, reporting, exclusions, and budget decisions.
They are not visible to shoppers. They are management fields.
Common uses include:
- Margin band
- Price band
- Season
- Stock depth
- Bestseller status
- Clearance status
- New arrival
- Product priority
- Return-rate risk
- Promotion group
The point is to make the account easier to manage.
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Book My Free Ad AuditA simple custom label setup
Google allows five custom label fields. A simple setup might look like this:
| Label | Use |
|---|---|
| custom_label_0 | Margin band |
| custom_label_1 | Stock depth |
| custom_label_2 | Seasonality |
| custom_label_3 | Price band |
| custom_label_4 | Product priority |
This is not universal. The best setup depends on what decisions you actually need to make.
If margin is critical, use a margin label. If stock changes quickly, use a stock label. If seasonality drives demand, use a seasonal label.
Margin labels
Margin labels are one of the most useful options.
For example:
- High margin
- Medium margin
- Low margin
- Loss leader
- Unknown margin
This helps prevent low-margin products from sharing the same targets as high-margin products. A product with a 65% margin can usually tolerate different bidding behaviour from a product with a 20% margin.
Without margin labels, ROAS can become misleading. Two products can show the same return in Google Ads while producing very different profit.
Stock labels
Stock labels help avoid wasting budget on products that cannot scale.
Useful groups:
- High stock
- Medium stock
- Low stock
- Out of stock soon
- Pre-order
If a product is low in stock, you may not want to keep pushing budget into it. If a product is overstocked, you may want controlled extra visibility, especially during sale periods.
Seasonality labels
Seasonal products need different expectations.
Examples:
- Spring
- Summer
- Autumn
- Winter
- Black Friday
- Christmas
- Evergreen
Seasonal labels help with budget planning, reporting, and temporary campaign structures. They also stop seasonal products from being judged unfairly during quiet periods.
Priority labels
Priority labels help teams connect media spend to merchandising strategy.
Examples:
- Hero product
- Bestseller
- New launch
- Clearance
- Strategic category
- Low priority
This is useful when the business wants to push products for reasons that may not be obvious from historical ROAS alone.
How labels improve campaign structure
Custom labels can support:
- Separate campaigns for high-margin products
- Different targets for clearance items
- Product exclusions for low-priority groups
- PMax asset group segmentation
- Standard Shopping tests
- Category-level reporting
- Budget shifts by stock or margin
Labels are only valuable when they change decisions. If labels sit in the feed but never affect reporting or structure, they are just tidy metadata.
Mistakes to avoid
Avoid:
- Creating labels no one maintains
- Making labels too granular
- Using labels that do not affect decisions
- Mixing conflicting logic in one label
- Forgetting to update labels when products change
- Applying labels only to a tiny part of the catalogue
- Building structure before the labels are reliable
A simple, maintained label system beats a clever, abandoned one.
How to implement labels
Start with the decision you want to improve.
If you want better profit control, build margin labels. If stock is the issue, build stock labels. If seasonal planning is the issue, build season labels.
Then map the values, apply them in the feed, confirm they pass into Merchant Center, and use them in campaign reporting or structure.
The final step is maintenance. Labels should change when products change.
Custom labels and PMax asset groups
Custom labels can help Performance Max structure too.
For retail PMax, labels can support listing group logic and asset group planning. A brand might keep high-margin best sellers in one asset group, clearance products in another, and seasonal launches in a dedicated group with matching creative.
This matters because PMax is automated, but its inputs still shape what the system can do. If product groups are messy, the automation starts from messy information.
Reporting examples
Custom labels become especially useful in reporting.
Instead of asking only "what was campaign ROAS?", you can ask:
- Did high-margin products receive enough spend?
- Did clearance products hit their sell-through target?
- Did low-stock products waste budget?
- Did seasonal products improve after creative changed?
- Did high-priority products gain visibility?
Those are better commercial questions.
Maintenance rules
Every custom label system needs maintenance rules.
Decide who owns each label, how often it updates, and what happens when product data changes. Margin labels may need finance input. Stock labels may need inventory feeds. Priority labels may need merchandising decisions.
Without maintenance, labels become stale. Stale labels are dangerous because they make the account look organised while decisions are based on old information.