Google Merchant Center Custom Labels: How to Organize Products for Smarter Shopping and Performance Max Campaigns

Google Merchant Center custom labels help ecommerce stores group products by business priorities that Google does not understand on its own. That includes profit margin, best sellers, seasonality, inventory status, design type, and low-traffic products.

If you want more control over product segmentation, budget allocation, and campaign structure, custom labels are one of the most useful tools inside Google Merchant Center. They make it easier to separate winners from underperformers, build cleaner Shopping and Performance Max campaigns, and analyze product groups in a way that actually matches how your store operates.

What are custom labels in Google Merchant Center?

Custom labels are product tags you add inside Google Merchant Center. They are meant for your internal campaign organization rather than for shoppers.

Google already lets advertisers group products by fields like brand and product type. That is helpful, but it often is not enough for serious campaign management. A store may need to group items by:

• High margin vs low margin
• Best sellers vs average performers
• Summer vs winter products
• Low inventory vs fully stocked items
• Premium vs budget products
• Low-traffic products that need separate handling

Custom labels solve that problem by letting you define those categories yourself.

Why Google Merchant Center custom labels matter

The biggest benefit of Google Merchant Center custom labels is control.

Without them, products with very different economics and performance can end up grouped together. That makes it harder to decide where budget should go. A proven best seller can wind up sharing spend with products that barely get impressions or rarely convert.

Custom labels make it easier to:

• Bid by business value, not just by default feed attributes
• Segment product groups for cleaner campaign structure
• Prioritize profitable products
• Exclude or isolate underperformers
• Adjust campaign focus by season
• Analyze results by meaningful categories

In short, Google Merchant Center custom labels help you tell Google which products deserve more attention and which ones should be limited, separated, or excluded.

How many custom labels can you use?

You get five custom label fields in Google Merchant Center.

Each label field can hold one value per product. That means a product can have one value for custom label 0, one for custom label 1, and so on, up to five fields total.

Not every product needs a value in every label field.

That is important. A clean setup is often better than forcing every product into every category.

Use Clarmix to automate your custom labels

If managing a supplemental feed in Google Sheets feels like too much manual work, Clarmix offers a faster, more automated path. Clarmix connects directly to the Google Ads API and analyzes your product performance data to classify products automatically , flagging best sellers, low-traffic items, high-margin SKUs, and underperformers without you having to build the logic yourself. From there, it generates an XML feed that plugs into Google Merchant Center, where you can map your custom label fields, schedule daily updates, and keep your labels current as performance shifts. Instead of deciding manually which products deserve a "Best Seller" or "Low Traffic" label, Clarmix surfaces that segmentation based on real data from your account. For stores with larger catalogs or frequent inventory changes, this removes the biggest bottleneck in custom label management: keeping the labels accurate over time.

How custom labels are structured

A useful way to think about custom labels is this:

• The label field is the category you want to organize by
• The label value is the specific tag assigned to a product

For example:

• Custom label 0: Season
• Values: Summer, Winter

Or:

• Custom label 1: Margin tier
• Values: High Margin, Medium Margin, Low Margin

Or:

• Custom label 2: Performance group
• Values: Best Seller, Low Traffic

Best ways to use Google Merchant Center custom labels

The right setup depends on your store, catalog, and campaign goals. Still, some use cases are especially practical.

1. Label products by margin

If you want to scale profitably, margin-based segmentation is one of the strongest uses of Google Merchant Center custom labels.

Example values:

• High Margin
• Medium Margin
• Low Margin

This lets you build campaign structures around profitability instead of only revenue. Products that generate more profit can receive more budget and closer optimization.

2. Label best sellers

A dedicated best seller label helps protect spend on products that already convert well.

Example values:

• Best Seller
• Standard

Or you can simply assign the best seller label only to your winning products and leave other items blank.

This makes it easier to create separate campaigns or listing groups for top performers.

3. Label by season

For stores with seasonal inventory, Google Merchant Center custom labels make campaign changes much easier.

Example values:

• Summer
• Winter

This structure allows you to quickly shift focus as the season changes. You can reduce exposure for out-of-season products and emphasize what is currently relevant.

4. Label by product style or design

If certain styles perform differently, style-based labels can help you isolate them.

Example values:

• Patterned
• Classic
• Minimal

This is useful when a certain design category deserves its own campaign or analysis.

5. Label low-traffic products

Some products barely get impressions or clicks. Grouping these into a low-traffic segment can help you keep them from draining attention or confusing broader campaign performance.

Example value:

• Low Traffic

These products can then be:

• Excluded from main campaigns
• Moved into a separate testing campaign
• Reviewed for feed quality or merchandising issues

6. Label by inventory or merchandising priority

Custom labels can also support operational decisions when certain products need special handling.

Example values:

• Low Inventory
• Do Not Advertise
• High Ticket
• Budget Friendly

These categories help align campaigns with what matters most to the business right now.

 

How to choose the right custom label strategy

Do not start by filling all five fields just because they are available.

Start with the decisions you actually want to make in Google Ads. Then build your Google Merchant Center custom labels around those decisions.

A simple framework

1. Identify the products that should be treated differently
2. Define the business reason such as profit, season, or performance
3. Create a consistent set of values
4. Apply labels only where they are useful
5. Use those labels in campaign structure and reporting

Good questions to ask

• Which products deserve more budget?
• Which products should be separated from the rest?
• Which products should be excluded or de-prioritized?
• What categories matter most to profitability?
• What product groups change based on season or stock?

How to add custom labels in Google Merchant Center

You can view and edit custom labels at the product level in Google Merchant Center, but the most efficient method for most stores is bulk management through a supplemental feed.

Option 1: Edit labels at the product level

Inside Google Merchant Center:

1. Go to Products
2. Open your product list
3. Show the custom label columns if they are hidden
4. Edit an individual product
5. Assign the needed label value

This works for quick changes, but it is not ideal for larger catalogs.

Option 2: Use a supplemental feed for bulk updates

For scale, the cleaner method is a supplemental feed in Google Merchant Center.

A common setup uses Google Sheets:

1. Go to Data sources in Google Merchant Center
2. Select Supplemental feeds
3. Choose to add supplemental product data
4. Select Google Sheets
5. Remove the sample content from the template
6. Add your product IDs in the first column
7. Optionally add product titles for readability
8. Add columns for the custom label fields you want to use
9. Enter the label values for each relevant product

This approach is easier to maintain and update in bulk, especially when labels change often.

Example custom label setups for different store types

Apparel store

• Custom label 0: Season
• Values: Summer, Winter
• Custom label 1: Margin tier
• Values: High Margin, Low Margin

Use case: shift campaign focus by season and push higher-margin items harder.

Store with hero products

• Custom label 0: Performance
• Values: Best Seller
• Custom label 1: Catalog group
• Values: Core Product Type

Use case: put proven winners into dedicated campaign structures so they do not share budget with weaker items.

Large catalog with underperformers

• Custom label 0: Traffic status
• Values: Low Traffic
• Custom label 1: Advertising status
• Values: Do Not Advertise

Use case: isolate weak products and keep them out of primary campaigns.

Style-driven catalog

• Custom label 0: Design
• Values: Patterned, Plain, Premium Finish

Use case: run separate campaigns or listing groups for specific styles that perform differently.

How to use Google Merchant Center custom labels in Google Ads

Once your labels are in place in Google Merchant Center, you can use them to structure Shopping and Performance Max campaigns.

A practical workflow looks like this:

1. Create or open a campaign in Google Ads
2. Go to product or listing group segmentation
3. Subdivide products by the custom label field you want to use
4. Include only the label values relevant to that campaign
5. Exclude everything else when tighter control is needed

Example: dedicated campaign for a winning style

If a specific product design is a strong performer, you can:

• Assign that design a unique custom label value
• Build a campaign or listing group around that value only
• Exclude all other products from that campaign

This keeps a proven product segment from competing for budget with less effective inventory.

Example: go one step deeper by item ID

After segmenting by custom label, you can subdivide further by item ID if one exact SKU is the standout performer.

That gives maximum control when a single product deserves its own dedicated spend.

When to exclude products using custom labels

Google Merchant Center custom labels are not only for pushing products harder. They are also useful for deciding what should get less attention.

You may want to exclude or isolate products when they are:

• Low traffic
• Weak performers
• Out of season
• Low priority
• Not meant to be advertised right now

This can clean up campaign performance and help concentrate spend where it is more likely to produce results.

Common mistakes with Google Merchant Center custom labels

Using labels without a clear strategy

If you cannot explain how a label will affect campaign decisions, it may not be worth creating.

Trying to label everything

Not every product needs a value in every field. Over-labeling often creates clutter rather than clarity.

Using inconsistent values

Stick to a defined naming system. For example, do not mix:

• High Margin
• high-margin
• HM

Inconsistent labels make reporting and filtering messy.

Ignoring business priorities

Default feed attributes are not enough for many stores. If profit, season, or performance matters, your labels should reflect that.

Leaving winners mixed with underperformers

One of the biggest missed opportunities is failing to separate products that are already proving themselves.

Managing large label sets manually

For bigger catalogs, manual product-by-product editing becomes difficult to maintain. A supplemental feed is usually the better long-term option.

Best practices for cleaner custom label management

• Define each label field before implementation
• Use simple, readable values
• Document what each field means
• Only assign labels where they add decision-making value
• Use supplemental feeds for bulk control
• Review labels when catalog priorities change

Frequently asked questions about Google Merchant Center custom labels

Are custom labels visible to shoppers?

No. Custom labels are for campaign organization and internal product grouping.

Can a product have more than one custom label?

Yes. A product can use up to five custom label fields in Google Merchant Center, but only one value per field.

Do all products need all five labels filled out?

No. Products only need values where those labels are useful.

What should I label first?

Start with the segmentation that most directly affects budget and performance. For many stores, that is margin, best seller status, seasonality, or low-traffic status.

Should I use custom labels in Performance Max?

Yes. Custom labels can be used to structure listing groups and isolate specific product segments inside Performance Max.

Is a supplemental feed better than manual edits?

For most stores managing more than a handful of products, yes. Supplemental feeds are cleaner and easier to update in bulk.

Simple starter plan for Google Merchant Center custom labels

If you are new to Google Merchant Center custom labels, start with a small, practical setup.

1. Choose one or two business priorities, such as margin and best sellers
2. Create clear label values
3. Add them through a supplemental feed
4. Build separate campaign groupings around those labels
5. Keep top performers from sharing budget with weaker products

This is usually enough to create immediate structure without overcomplicating the account.

Final takeaway

Google Merchant Center custom labels are one of the simplest ways to bring business logic into your product feed and campaign structure. They help you group products by what actually matters to your store, whether that is margin, best seller status, season, design, or low-traffic performance.

Used well, they make Shopping and Performance Max campaigns easier to control, easier to analyze, and more aligned with profitability. If your current setup relies only on default product attributes, adding custom labels is often the next step toward smarter segmentation and better budget allocation.