Boosting ROAS: The Hidden Power of Custom Labels in Product Feeds

If you run Google Shopping or Performance Max, you’ve probably felt the frustration of “good” campaigns that still waste budget on low-margin, low-converting products. One of the fastest ways to improve efficiency isn’t a new bidding strategy—it’s better product segmentation. That’s where custom labels become a quiet ROAS lever.

Custom labels let you tag products in your feed with business context (like margin, seasonality, or best-seller status) so you can steer bids, budgets, and reporting around what actually matters. Used well, they make your Google Ads decisions clearer, faster, and more profitable.

What custom labels are (and why they impact ROAS)

In Google Merchant Center, custom labels are optional feed attributes (custom_label_0 through custom_label_4) that you define. Google doesn’t use them to match queries the way titles or descriptions do. Instead, they’re designed for advertising management: segmentation, reporting, campaign structure, and bidding.

ROAS improves when you can:

Invest more in products that can profitably scale (high margin, high AOV, strong conversion rates).
Reduce spend on products that consistently underperform (thin margin, frequent returns, out-of-stock risk).
Speed up optimization by grouping similar items instead of managing thousands of SKUs individually.

Without custom labels, you end up relying on blunt groupings (brand, category, product type). Those may not align with profitability or inventory reality, which is how ROAS gets diluted.

High-impact custom label strategies for ecommerce

The best label schema is simple, stable, and tied to decisions you can act on. Below are practical label frameworks that map directly to Google Ads levers.

1) Margin tiers (the ROAS multiplier)

Tag products by gross margin bands, for example:

Margin_60_plus
Margin_40_59
Margin_20_39
Margin_below_20

This enables you to bid more aggressively where you can afford it. It also prevents the classic mistake of chasing ROAS on low-margin items that still lose money after shipping, returns, and fees.

2) Bestseller vs. long-tail

Use your own sales data to label products:

Top_20_percent
Mid_60_percent
Bottom_20_percent

Then, you can allocate budgets to protect top sellers (often the easiest scale) while isolating long-tail exploration.

3) Seasonality and promotional windows

For retailers with frequent promo cycles, add labels like:

Holiday
Summer
Back_to_school
Evergreen

When a season ends, you can quickly downshift spend or exclude those groups without rebuilding your feed structure.

4) Price bands and AOV drivers

Label by price tier (e.g., Under_25, 25_75, 75_200, 200_plus) to see where Shopping traffic is profitable. This is especially useful if your store has different conversion rates and return behavior by price point.

5) Inventory risk and availability sensitivity

If you struggle with out-of-stock churn, label items like Low_stock or Clearance. This is less about ROAS in the dashboard and more about preventing wasted spend on items that can’t fulfill.

How to implement custom labels cleanly (without making your feed messy)

Custom labels work best when they’re generated systematically, not manually edited ad hoc. Choose 1–3 label dimensions to start, and keep values consistent (no random capitalization or overly specific strings).

Decide what decisions the label will drive. Example: “Margin tier will control budgets and tROAS targets.”
Define a small set of allowed values. Keep each label to 4–8 options max so reporting stays readable.
Document the rules. For instance: “Margin_40_59 = gross margin between 40% and 59% based on product cost.”
Populate labels via feed rules or a feed management layer. This can be done by mapping from your ecommerce platform fields, a supplemental feed, or rules that bucket by price/margin.
Validate in Merchant Center diagnostics. Confirm the attribute is present across most SKUs and values are consistent.

If you need a structured way to enrich and standardize feed data (including custom labels), a feed optimization platform can help centralize rules and reduce manual work. For example, you can manage and refine attributes in Brandlio’s feed optimization workspace so labels stay consistent as your catalog changes.

Using custom labels to build better Google Ads structures

Custom labels become powerful when you use them to control how products are grouped in campaigns and asset groups.

Shopping campaigns: product groups that mirror profitability

In Standard Shopping, you can subdivide product groups by custom label. A practical structure:

Campaign A: Margin_60_plus (higher budget, more aggressive bids)
Campaign B: Margin_40_59 (moderate)
Campaign C: Margin_below_20 (constrained, or exclude entirely)

This is a direct path to ROAS improvement because spend aligns with unit economics.

Performance Max: smarter asset group segmentation and reporting

PMax doesn’t let you bid per product group the same way, but labels still matter because they:

Help you organize asset groups around product sets (e.g., Bestsellers vs. Clearance).
Make reporting cleaner when you break out performance by label in Merchant Center and Ads.
Support decisions like splitting into multiple PMax campaigns when one group is dominating spend.

A common approach is to run a “Bestsellers” PMax and a “Discovery/Long-tail” PMax, defined by custom labels, so you can protect the products that pay the bills while still testing new SKUs.

Common mistakes that quietly hurt ROAS (and how to fix them)

Mistake 1: Too many label values

If you create dozens of unique strings (e.g., “HighMargin_47.3%”), reporting becomes useless. Fix: bucket into ranges and limit the allowed set.

Mistake 2: Labels that don’t map to actions

“Red” or “New” might be descriptive but not actionable unless you actually change bids, budgets, or exclusions based on them. Fix: tie each label to a specific optimization playbook.

Mistake 3: Inconsistent formatting

“High Margin,” “high_margin,” and “HIGHMARGIN” become separate values. Fix: standardize naming conventions (use underscores, consistent casing) and enforce with rules.

Mistake 4: Ignoring feed health and disapprovals

Labels won’t help if key products are suppressed due to feed issues. Keep an eye on Merchant Center diagnostics and fix high-impact problems first: price mismatches, shipping settings, missing GTIN, or policy disapprovals. Google’s Merchant Center documentation is a solid reference for understanding feed requirements and common errors: Google Merchant Center Help.

Mistake 5: Not revisiting labels as the business changes

Margin, inventory, and seasonality shift. Fix: schedule a monthly or quarterly review to ensure label rules still reflect current reality.

A practical checklist to start boosting ROAS this week

Pick one segmentation that affects profit (margin tiers is usually best).
Create 4–6 label values and document the definitions.
Populate custom_label_0 across your catalog.
Split campaigns or product groups using the label and set different budgets/bids/tROAS targets.
Review performance by label weekly: ROAS, conversion rate, CPC, and impression share.
Iterate: add a second label (bestseller/seasonality) only after the first one is stable.

When your feed is consistently enriched, campaign management gets simpler: you’ll know which products deserve more investment and which should be constrained or excluded.

Conclusion: Make your feed work like a profit map

Custom labels don’t change how Google matches searches, but they dramatically improve how you control spend. By tagging products with margin, demand, and inventory context, you can structure Shopping and Performance Max around profitability instead of guesswork—often leading to cleaner reporting and higher ROAS.

Next step: choose a label framework (start with margin tiers), implement it consistently, then restructure campaigns around those segments. If you want a centralized way to apply feed rules and keep custom labels clean as your catalog evolves, explore Brandlio’s product feed management tools.