Strategic custom labels: more profit from the same Ads budget.
Performance Max is effective at maximizing overall revenue, but to do so it favors high-volume products, often at the expense of higher-margin items. Here's how a custom label structure fixed that distortion.
The problem
Performance Max algorithms optimize for overall revenue, not margin. The result is a standardized algorithmic optimization that doesn't differentiate by profitability, with two concrete consequences: difficulty promoting strategic segments (new arrivals, seasonal items, high-margin products) and a ROAS that becomes a misleading metric: campaigns with a high ROAS generating minimal profit, because they're built on high-volume, low-margin products.
On top of that, PMax's "black box" nature limits visibility into where budget is actually being allocated within the campaign.
The solution: a custom label schema
We structured the product feed with five custom labels, applied via Feed Rules in Google Merchant Center and supplemental feeds on Google Sheets:
Campaign structure
Separate PMax campaigns per margin tier, with a differentiated tROAS (Target ROAS): lower for high-margin products, letting the algorithm spend with fewer constraints where return per euro was already high, and higher for low-margin products, to protect profitability even at lower volumes.
Results (6–12 months)
- +40% net profit from Google Ads campaigns, at the same investment logic.
- +15% total revenue, so growth wasn't achieved at the expense of margin.
- +96% ROAS on HighMargin and Bestseller segments, where the algorithm could push without the constraint of an overly conservative target.
- −15% spend on low-performing, low-stock items, with budget reallocated toward what generated real margin.