What are product labels and why are they important for Google Shopping?
Simply supplying 1000 products to Google Merchant Center usually leads to a situation where 50-ish products drive most of the sales, 100 products have no sales, but spend 30% of the budget for nothing and the rest is just hanging without either traffic or sales.
Product labels come in handy by allowing you to easily define product segments with high potential for budget increase as well as those that waste budget. Afterward, the account manager relocates money from the latter to the former thus improving campaign performance.
How does product segmentation work?
While being advertised on Google, each product inside of the campaign gets its own performance history, which includes impressions, clicks, costs, conversions, and revenue. While usually, the account manager looks at the overall campaign performance, the Label Manager goes through every single product and compares its performance against the desired target values.
Based on the comparison result, the product is assigned to one of the five segments and receives a corresponding value to Custom Label. In the end, these labels are visible inside the Google Ads interface, allowing users to select which products to advertise.
What are the factors that define the segment for each product
Segmentation parameters, as of the early 2024 version of the LM, include four key metrics - Impressions, Clicks, Revenue, and Costs. In addition, we also request three values from the user - Breakeven ROAS, Lookback Window, and Custom Label ID. Each of the five segments is based on its own logic:
1. Winners - Have a high amount of clicks and deliver ROAS > Breakeven ROAS
2. Prospects - Have ROAS > Breakeven ROAS, but traffic is low
3. Jumpers - Almost reach Breakeven ROAS
4. Sleepers - Did not get sufficient traffic to be evaluated
5. Wasters - Had enough traffic, but under-delivered on ROAS
All three settings could be modified after the initial setup using the LM dashboard, but we recommend adjusting them not more than twice a month to be able to compare the performance with old and new settings. In addition, changing these values would trigger an immediate analysis to be processed by LM.
How often are the segments updated?
By default, LM conducts analysis once a week, which is an optimal balance between data variation and time relevance of the produced results. The analysis is done on the same day and time, but it may take a few more hours until the updated results appear in Google Merchant Center and Google Ads.
How do products move between segments?
As the Google Ads campaign keeps pushing products to Shopping Ads, Label Manager will be getting new data every time the analysis is made (weekly by default). This means that if a certain product starts getting traction in sales at an expected ROAS, it will likely move to the Winners segment by itself. The opposite is also true - if a former Winner starts losing its shape, it may end up in Jumpers or even Spenders on the next analysis.