Sales & Conversion
Personas
Ecommerce
Time to ROI
Short-term (< 3 months)
OK, so you've set up your Shopify store with Google Shopping, but your campaigns are eating budget without delivering results? I get it. Most merchants think connecting their product feed to Google Shopping is enough. Wrong.
When I started working with e-commerce clients, I made the same mistake. I'd set up their Google Merchant Center, connect the basic product feed, and expect magic to happen. The reality? We were competing with every other store selling similar products, with zero control over how Google grouped and bid on our items.
That's when I discovered the game-changer: custom labels. These little-known feed attributes let you organize your products exactly how you want Google to see them. Not how Shopify categorizes them, not how Google guesses they should be grouped, but based on your business logic.
In this playbook, you'll learn:
Why most Shopify stores waste money on Google Shopping (and how custom labels fix this)
My 4-label system that organizes any product catalog for profitable campaigns
The profit margin labeling strategy that prevents you from promoting low-margin items
Seasonal and inventory-based labels that automatically optimize your ad spend
Advanced bidding strategies using custom labels as campaign filters
This isn't theoretical advice from someone who's never run Google Shopping campaigns. This comes from optimizing hundreds of product feeds and seeing the direct impact on e-commerce performance.
Industry Secrets
What Google doesn't tell you about product feeds
Most Google Shopping tutorials focus on the basics: connect your Shopify store, sync your products, create a campaign. They make it sound like Google's algorithm will figure out the rest.
Here's what the industry typically recommends:
Use Shopify's native Google channel - just install the app and let it handle everything automatically
Optimize product titles and descriptions - stuff keywords and hope for the best
Set competitive prices - race to the bottom on pricing to win the buy box
Focus on product images - make them pretty and Google will favor your listings
Wait for the algorithm to learn - give Google time to optimize your campaigns
This conventional wisdom exists because it's simple to implement and most agencies don't want to deal with feed complexities. They'd rather set up basic campaigns and move on to the next client.
But here's where this approach falls short: You're giving Google zero business context about your products. Google sees "Red T-Shirt Size M" but doesn't know if it's your best-selling item, highest-margin product, or something you're trying to clear out.
Without custom labels, you're essentially running blind. Google groups your products however it wants, bids on them based on its assumptions, and you have no control over which products get priority in your campaigns. You end up promoting low-margin items while your profitable products get ignored.
This is why most Shopify stores see their Google Shopping campaigns plateau after the initial honeymoon period. They're optimizing in the dark, without the granular control that custom labels provide.
Consider me as your business complice.
7 years of freelance experience working with SaaS and Ecommerce brands.
I discovered the power of custom labels the hard way, working with a fashion e-commerce client who was burning through $3,000 monthly on Google Shopping with barely break-even results.
The store had over 1,000 products across multiple categories - clothing, accessories, and seasonal items. Their setup looked perfect on paper: clean product titles, optimized descriptions, competitive pricing. But their Google Shopping campaigns were a mess.
The problem became clear when I audited their performance data. Google was heavily promoting their lowest-margin accessories while their high-profit seasonal items barely got any impressions. Their best-selling winter coats were getting lost in the general "Clothing" category, competing against $10 t-shirts for the same keywords.
What made this situation worse was their inventory management. They had items with 2-3 units left getting the same ad spend as products with 200+ units in stock. Clearance items that needed to move fast were grouped with regular-priced products, getting minimal visibility.
My first attempt was the typical approach - adjusting bids at the campaign level, creating more granular ad groups, optimizing product titles. We saw marginal improvements, but nothing significant. The fundamental issue remained: Google didn't understand our business priorities.
That's when I realized we needed to teach Google how to see our products through our business lens, not its algorithm's assumptions. We needed custom labels.
Here's my playbook
What I ended up doing and the results.
Here's the exact 4-label system I implemented that transformed their Google Shopping performance:
Label 0: Profit Margin Tiers
I segmented every product into profit margin buckets: High (50%+), Medium (25-49%), Low (10-24%), and Clearance (<10%). This became our primary campaign organization tool. High-margin products got their own campaigns with aggressive bidding, while low-margin items were grouped together with conservative bids.
The implementation was straightforward. I created a spreadsheet mapping each product's cost and selling price, calculated margins, then used Shopify's metafields to assign the appropriate label. Products above 50% margin got "High-Profit" as custom_label_0, and so on.
Label 1: Inventory Velocity
This label tracked how fast products were selling: Bestseller (20+ units/month), Regular (5-19 units/month), Slow (1-4 units/month), and Clearance (overstock). This prevented us from over-promoting items about to go out of stock while pushing slow-moving inventory harder.
I pulled this data from Shopify's analytics, looking at 90-day sales velocity. Products selling consistently got "Bestseller" labels and priority placement, while slow movers were tagged for clearance campaigns.
Label 2: Seasonality
Since this was a fashion brand, timing was everything. I created labels for Core (year-round items), Spring/Summer, Fall/Winter, and Holiday-specific products. This allowed us to automatically adjust campaign budgets based on seasonal demand without manual intervention.
The beauty of this system was its automation potential. As seasons changed, I could bulk-update labels and watch campaigns automatically shift focus to relevant inventory.
Label 3: Product Performance
This label tracked Google Shopping performance specifically: Star (high CTR + conversion), Standard (average performance), Problem (low CTR or conversion), and New (insufficient data). This created a feedback loop where top-performing products got more investment.
Every month, I analyzed which products had CTRs above 2% and conversion rates above store average. These became "Star" products with increased bids, while "Problem" products were either optimized or paused.
Implementation Process
Setting this up required three steps: data analysis, Shopify configuration, and Google Ads campaign restructuring. First, I exported all product data and sales history to build my labeling criteria. Then I used Shopify's bulk editor and metafields to apply custom labels to each product. Finally, I restructured their Google Ads account around these labels instead of generic categories.
The key was creating campaigns that aligned with business goals, not just product categories. "High-Profit Bestsellers" became our premium campaign with maximum budgets, while "Low-Margin Clearance" got minimal spend focused purely on inventory movement.
Strategic Segmentation
Instead of competing in one giant product pool, custom labels let you create targeted campaigns for different business objectives
Performance Tracking
Each label becomes a performance metric, helping you identify which products deserve more investment
Automated Optimization
Labels enable smart bidding strategies that align ad spend with profit margins and inventory levels
Seasonal Intelligence
Time-based labels automatically shift budget allocation as market demand changes throughout the year
The results spoke for themselves. Within 30 days of implementing the custom label system, their Google Shopping performance transformed completely.
Cost Efficiency Improvements:
Average cost-per-click dropped by 23% as we stopped competing against ourselves in generic categories. The "High-Profit Bestsellers" campaign had CPCs 40% lower than their previous general campaigns, proving that targeted relevance beats broad reach.
Revenue Impact:
Total Google Shopping revenue increased 47% in the first month, with profit margins improving even more dramatically. The "High-Profit" labeled products now represented 68% of total Shopping revenue, up from just 31% before the restructure.
Inventory Management:
Perhaps most importantly, we solved their inventory imbalance. Slow-moving products tagged with clearance labels started moving 3x faster, while bestsellers maintained healthy stock levels instead of constantly selling out.
The seasonal labeling proved especially valuable during their fall transition. As summer items moved to clearance and fall inventory launched, the campaigns automatically shifted budget allocation without any manual intervention.
After three months, their return on ad spend (ROAS) had improved from 2.1x to 4.3x - not just because revenue increased, but because we were promoting the right products with the right margins.
What I've learned and the mistakes I've made.
Sharing so you don't make them.
Here are the key lessons I learned from implementing custom labels across multiple e-commerce clients:
Start with business logic, not Google categories - Your custom labels should reflect how you want to run your business, not how Google thinks products should be organized
Profit margins trump everything - If you only implement one custom label, make it profit-based. No point driving traffic to products that don't make money
Automate label updates - Static labels become outdated quickly. Set up systems to refresh inventory, performance, and seasonal labels regularly
Test label combinations - Don't just use one label per campaign. Combining "High-Profit" + "Bestseller" creates your premium product segment worthy of maximum investment
Monitor label performance separately - Each custom label should have its own performance metrics and optimization strategy
Keep labels simple - Resist the urge to create 20 different labels. Four strategic labels work better than ten confusing ones
Align with inventory cycles - Your labeling strategy should support your inventory management, not complicate it
What I'd do differently: I'd implement custom labels from day one instead of trying to fix broken campaigns later. The data architecture you build early determines how sophisticated your optimization can become.
Common pitfall to avoid: Don't use custom labels as just another way to organize products. Use them as business intelligence that drives campaign strategy.
How you can adapt this to your Business
My playbook, condensed for your use case.
For your SaaS / Startup
For SaaS companies selling physical products or merchandise:
Label products by customer segment (trial users vs paid customers)
Use custom labels to promote low-commitment items to cold traffic
Create labels for customer lifetime value optimization
For your Ecommerce store
For e-commerce stores implementing custom labels:
Start with profit margin and inventory velocity labels immediately
Use seasonal labels to automate budget shifts throughout the year
Create performance-based labels that promote your best converters
Combine labels in campaigns for laser-focused targeting