How to Segment Products in Google Ads for More Sales

Are your Google Ads campaigns struggling to deliver the sales and profits you need? One common issue many eCommerce businesses face is failing to properly segment their product catalog. Without segmentation, your high-margin products may be overshadowed by those with higher traffic, leaving potential revenue untapped.

Product segmentation allows you to allocate budgets strategically, ensuring every dollar spent is aligned with your business goals. In this guide, we’ll explore how to effectively segment products in Google Ads, boost profitability, and optimize campaigns for both Performance Max and Shopping Ads.

Why Product Segmentation Is Key to Maximizing Profitability in Google Ads

Google Ads uses algorithms to prioritize products with high traffic and conversion rates. While this approach often reduces costs per conversion, it can lead to imbalanced ad spend—favoring products with low profit margins over those that generate greater revenue per sale.

Imagine managing an eCommerce store with over 1,000 SKUs. Some products might see high search volume and consistent sales but have low profit margins. Meanwhile, high-margin products with lower traffic or conversion rates may be neglected. Without intervention, Google Ads could funnel most of your budget into low-profit items.

By segmenting your products into separate campaigns, you regain control over budget distribution, ensuring high-margin products receive adequate focus. This strategic approach can improve your return on ad spend (ROAS) and overall profitability.

How to Group Products for Effective Campaign Segmentation

The foundation of product segmentation lies in grouping products based on performance and profitability. Here's how to start:

Identify Key Metrics

Analyze each product’s:

• Search Volume: Higher search volumes typically indicate greater traffic potential.
• Conversion Rates: Products with higher conversion rates often deliver quicker returns.
• Profit Margins: Calculate how much profit each product contributes after deducting costs.

Create Segments Based on Performance

Separate products into categories such as:

• High-Traffic, Low-Margin Products: These products drive sales volume but contribute less profit per sale.
• Low-Traffic, High-Margin Products: These require budget attention to maximize profitability despite lower conversion rates.
• Use Custom Labels and Data Feeds

 👉 Small Budget Strategies for Google Ads

In Google Shopping campaigns, utilize custom labels to tag products by performance. This helps you filter and manage segments more efficiently when creating campaigns.

By grouping products thoughtfully, you can prioritize which segments align with your business objectives and tailor campaigns to focus on both growth and profitability.

Budget Allocation Strategies for Segmented Campaigns

Once your products are grouped, the next step is to allocate budgets strategically. Google Ads budgets are set at the campaign level, not the product level, so proper segmentation ensures each group gets the attention it deserves.

Assign Budgets Based on Goals

For each product segment, allocate budgets according to its importance to your business:

• High-Traffic, Low-Margin Products: These products can handle a larger share of the budget due to their ability to drive consistent conversions.
• Low-Traffic, High-Margin Products: Assign a smaller but sufficient budget to ensure these items aren’t overshadowed by high-volume products.

For example:

• Campaign A (High-Traffic, Low-Margin): $150/day
• Campaign B (Low-Traffic, High-Margin): $50/day

Adjust Budgets Dynamically

Monitor campaign performance regularly and adjust budgets based on seasonal trends, inventory levels, and profitability. For instance, during peak shopping seasons, consider increasing budgets for high-margin products to capitalize on increased buyer intent.

Best Practices for Structuring and Optimising Segmented Campaigns

Proper structuring is essential to the success of your segmented campaigns. Here's how to optimize them:

Leverage Performance Max and Shopping Campaigns

• Performance Max: Use this campaign type to promote a wide range of products across Google’s ecosystem, but ensure segments are clearly defined.
• Shopping Campaigns: These are ideal for product-specific advertising. Optimize your product feeds and use custom labels to manage segmentation.

Use Data Feeds to Refine Campaigns

Ensure your product data feeds are well-optimized:

• Include accurate product titles, descriptions, and images.
• Use custom labels for metrics like “profitability” or “seasonal demand.”
• Regularly update your feed to reflect inventory changes and pricing updates.

Implement Bid Strategies Aligned with Segments

• For high-traffic products, use automated bidding strategies like Target ROAS to maximize volume.
• For high-margin products, consider manual bidding or Target CPA to maintain control over costs.

Measuring and Scaling the Success of Your Segmented Campaigns

The success of your campaigns depends on how well you track performance and adapt to new data.

Track Key Performance Indicators (KPIs)

Monitor these metrics for each product segment:

• Return on Ad Spend (ROAS): The ultimate measure of campaign profitability.
• Conversion Rates: Gauge the effectiveness of your ad targeting and landing pages.
• Budget Utilization: Ensure no segment is underfunded or overfunded.

Refine Campaigns Based on Insights

• If high-margin products are underperforming, revisit your ad copy, bids, or landing pages.
• Adjust product groupings if certain items consistently lag behind others in their segment.

Scale Successful Campaigns

Gradually increase budgets for top-performing segments. For instance, if your low-traffic, high-margin products start generating strong ROAS, allocate more budget to these campaigns to scale profits.

Lastly, getting your campaign structure correct is essential, and you need to have an optimisation strategy, like my Google Ads eCommerce Optimisation Checklist.

You can download a copy of my Google Ads eCommerce Optimisation Checklist in the video description below.