Your TLDR: custom labels let you tag every product with business signals — performance tier, margin, stock level, price competitiveness, season — and then use those tags to control how each group is bid on, budgeted, and campaigned. Used well, they turn a flat “everything in one bucket” account into a segmented structure where your best products get your best budget. But the real value only comes when you treat label evaluation as an ongoing process, not a one-off setup.
This piece expands the tiering and labelling steps from our complete Google Shopping guide for South Africa.
What custom labels are
Google Shopping gives you five custom label fields — custom_label_0 through custom_label_4 — that you can populate with any values you like. Google doesn’t use them for matching; they’re purely for you, to segment your products in ways the standard feed attributes don’t allow.
The point of a label is that it lets you group products by something meaningful to your business and then act on that group as a unit — bidding differently, budgeting differently, or campaigning differently. A product’s category tells Google what it is; a custom label tells your campaigns what to do with it.
The core framework: performance tiers
The most valuable use of custom labels is to segment by performance and strategic value. Instead of splitting campaigns only by product category, tier your products:
- Heroes — proven high-volume, high-margin converters. These get aggressive target ROAS and uncapped budgets. They’re your account’s engine, and they should never be starved.
- Mid-performers — decent ROAS but inconsistent volume. Steady tROAS, moderate budget.
- Discovery / long-tail — low-volume or unproven products that need their own space to prove demand. These belong in a dedicated discovery campaign, not competing with heroes.
- Zombies — non-converting products under investigation, or ready to cut once the data is clear.
This structure stops your best products from subsidising dead weight, and it ensures your long-tail actually gets served instead of being silently starved. It’s the labelling layer that makes the whole discovery-campaign strategy possible.
Beyond performance: other label dimensions
Performance tiering is the start, but the more business intelligence you pipe into your labels, the smarter your segmentation becomes. Other high-value dimensions:
Margin tier. Label products by profitability so you can bid toward profit, not just revenue. A high-revenue, low-margin product and a low-revenue, high-margin one deserve very different treatment.
Stock level. Deprioritise low-stock SKUs before they cause out-of-stock clicks, and push deeper on well-stocked lines. This is where your ad account and your inventory data start talking to each other.
Price competitiveness. Label where you sit relative to competitors on each product — cheapest, mid, or most expensive. Bid up where you’re the cheapest (high conversion probability); pull back where you’re significantly more expensive.
Seasonality. Tag seasonal and tactical products so you can ramp them up and down at the right time, and so your automated rules don’t cut a product right before its season.
Bestseller / new arrival status. Flag your bestsellers for priority treatment and your new arrivals for discovery budget.
Building labels via a supplemental feed
You don’t overwrite your primary feed to add labels — you use a supplemental feed in Merchant Center that layers custom label values on top of your existing product data, matched by item ID. This keeps your primary feed (often managed by your ecommerce platform) untouched while giving you a clean layer to control segmentation.
You don’t need heavy automation on day one. Even a supplemental feed built from your initial 90-day performance data is a massive improvement over “everything in one bucket.” The sophistication comes later, as you automate the label updates against live business data.
The part everyone misses: labels are an ongoing loop
Here’s the difference between a clean-up that lasts and one that quietly rebuilds within a quarter: custom labels are not a set-and-forget configuration — they’re a living feedback loop.
A product’s label is a snapshot of its performance right now. But performance moves constantly. A hero enters its off-season and cools off. A long-tail product suddenly catches demand. A new range lands with no history. A competitor undercuts your price and your conversion rate drops. If your labels are frozen at whatever you set months ago, your entire campaign structure is optimising against a picture that’s out of date.
Run the evaluation on a regular cadence — monthly is a sensible default — and let the refreshed labels drive four decisions:
Segmentation. Products graduate and demote between tiers as their performance changes, so heroes, mid-performers, and discovery products are always correctly grouped. A product that’s stopped converting drops to discovery; one that’s proven itself graduates to hero.
Budgets. Shift spend toward the tiers and products proving themselves, and pull it back from those that have had a fair window and failed. This is continuous reallocation, not an annual review.
Campaign strategy. The label data tells you when a discovery campaign has surfaced enough new performers to warrant its own dedicated push, or when a category is quietly decaying and needs attention.
Inventory planning. This is the underused one. Your Shopping performance data is a live demand signal. The products earning impressions, clicks, and conversions are telling your buying and merchandising teams what to reorder, what to stock deeper, and what to stop buying. Feed that intelligence back into inventory decisions and your ad account stops being just a spending channel and becomes a demand-forecasting asset.Â
Done properly, the label loop connects your ad account to your P&L: ad performance informs stock, stock informs the feed, the feed informs campaigns, and campaigns generate the next round of performance data.
Custom labels in Performance Max
Everything above applies to pMax as well as Standard Shopping. In pMax, custom labels are how you steer which products serve in which asset groups, since you can’t split by category as freely. The constraint is that pMax bids at the campaign level, so labels drive structure and inclusion rather than per-product bids.Â
Frequently asked questions
What are custom labels in Google Shopping? Custom labels are five optional feed fields (custom_label_0 to custom_label_4) that let you tag products with your own business signals — performance tier, margin, stock level, season, and so on. Google doesn’t use them for matching; you use them to segment products and control how each group is bid on and budgeted.
How should I structure custom labels? Start with performance tiers — heroes, mid-performers, discovery, and zombies — so your best products get your best budget and unproven products get their own space. Then layer in other dimensions like margin, stock level, and price competitiveness as your setup matures.
How do I add custom labels to my feed? Use a supplemental feed in Merchant Center that layers label values onto your existing products by item ID. This keeps your primary feed untouched. You can start with a static supplemental feed based on your performance data and automate the updates later.
How often should I update custom labels? Regularly — monthly is a sensible default. Labels are a snapshot of current performance, and performance shifts as demand, seasons, prices, and new products change. Frozen labels mean your campaigns optimise against outdated information. Treat evaluation as an ongoing loop, not a one-off setup.
Can custom labels help with inventory planning? Yes. Because labels tie product performance to business data, a well-maintained label system doubles as a demand signal — telling your buying team what to reorder, stock deeper, or stop buying. It connects your ad account to your inventory and P&L.
Next in this cluster: structuring Performance Max asset groups by product tier and using Shopping data for inventory and demand planning (coming soon). Or return to the complete Google Shopping guide for South Africa.
Want a custom-label structure built around your catalogue and margins? Get in touch.
