A custom label is a field in your Google Merchant Center product data that you fill with your own values, so you can group products in Google Ads by something Google does not already know, such as profit margin, best sellers or season. There are five of them, named custom_label_0 to custom_label_4, and shoppers never see them.
How custom labels work
Each product in your product feed can carry a value in each of the five label fields. You decide what each label means. A typical scheme might be label 0 for margin band (high, medium, low), label 1 for best seller status, label 2 for season (summer, winter, all year), label 3 for price band and label 4 for clearance stock.
In Google Ads, Standard Shopping campaigns and the listing groups inside Performance Max asset groups can then be subdivided by those labels. That lets you bid harder on high-margin lines, give best sellers their own budget, or remove clearance products from a campaign without touching the feed itself. Google limits how many distinct values a single label can hold across the account, so labels work best with a short list of broad buckets rather than one value per product.
You can add labels in several ways: in the original feed export from your shop platform, through feed rules in Merchant Center, or with a supplemental feed, which is often a simple Google Sheet keyed on product ID. The supplemental route suits small teams because a non-technical person can update margin or season values without touching the shop.
Why it matters
Without custom labels, Google groups products only by attributes it already has: brand, category, product type, condition and item ID. None of those tell it which products actually make you money. A UK fashion retailer might sell a £20 T-shirt at a 15% margin and a £60 coat at 55%; to Google they are just two products, and a single return-on-ad-spend target treats them the same.
Labels let you bring business knowledge into the account. They are also the cleanest way to manage seasonal ranges, such as moving garden furniture into its own campaign for spring and summer, and to protect budget from items that are low in stock or about to be discontinued.
Common mistakes
- Using labels for information that already exists as a standard attribute, such as brand or Google product category.
- Creating so many values that each listing group has too little data for bidding to learn from.
- Letting labels go stale, so last season’s “best seller” tag still pulls budget towards a product that no longer sells.
- Changing what a label number means halfway through the year, which breaks the history behind every report that uses it.
- Not writing the scheme down, so nobody remembers what label 3 was for.
How to act on it
Start with one question: what would you treat differently if you could? For most shops the answer is margin, so begin with a margin label of three or four bands. Add a best seller or new-in label next if you have the data to keep it current.
Keep a short document listing each label number, its meaning and its allowed values. Build labels through a supplemental feed or feed rules so they can be updated without a developer, then split your Shopping or Performance Max listing groups by the label that matters most. Review the values monthly. Structuring feeds and listing groups like this is a routine part of Performance Max campaign management.