The Labelizer Strategy: 5 Proven Product Segmentation Strategies for Increased Revenue and Profitability

When discussing product segmentation using the Labelizer Strategy, we can consider several strategies. In this article, we will explore various approaches, ranging from basic to advanced, depending on your focus: profit, revenue or both, and always taking into account the amount of performance data available.

Article Outline:

1. Basic approach: Create 2 different campaigns
2. Medium approach: Create 3 different campaigns
3. Advanced approach: Create 4 different campaigns
4. Boost campaign

1. Basic approach: Create 2 different campaigns

Note: We recommend having at least 30 conversions in total before creating two different campaigns.

1.1 Focus on increasing profitability 

If your goal is to maximize profit in your Shopping/Performance Max campaigns, our recommendation is to catch the Villains. That is, set them apart to save money. Here are some tips for this strategy:

1. Allocate the lowest budget to your Villains compared to your other products.
2. Make sure that you set the same target ROAS in Google Ads for your different labels. Since Villains are underperforming products, its ROAS target will be higher compared to its actual ROAS.

By following these tips, you will “force” Google’s algorithm to be selective in its bidding. Thus, it will prioritize bidding on searches that are more likely to generate a conversion, in other words, specific keywords (e.g., Heroshop pink rose shower gel 150 ml).  

This is what your campaign distribution will eventually look like if you follow this first approach:

1.2 Focus on getting more revenue

Within this basic approach, you might also want to focus on getting more revenue. And for that, we recommend waking up the Zombies (products that barely get any clicks or impressions. They are “sleeping”). To achieve this, you need to activate these products by creating a dedicated Zombie campaign.

Once you set your Zombies apart, you will “force” Google’s algorithm to start showing these products. Over time, as they gather performance data, they will move to other labels.

2. Medium approach: Create 3 different campaigns

Once you have enough performance data in your account, you are safe to focus on both goals: higher revenue and profitability. We recommend applying this approach only if you have at least 70 conversions. 

To focus on revenue and profit, you can combine the two previous approaches by setting apart both Villains and Zombies. 

This is what this approach looks like:

3. Advanced approach: Create 4 different campaigns

Once you’ve accumulated sufficient performance data in your account, you can move to the advanced approach. In this particular case, we recommend having at least 100 conversions in total. Additionally, we recommend adopting this strategy when both the ‘Sidekicks’ and ‘Heroes’ labels have achieved 30 conversions within the last 30 days, and when the ‘Villains’ category is big enough to be its own campaign.

This approach implies creating 4 different campaigns, one for every specific label to give them the specific treatment they need. 

The key difference from the previous approach is that this advanced strategy allows you to focus both on revenue and profit and, at the same time, focus on creating more Heroes. 

4. Boost campaign

Finally, if you have enough performance data, you might want to create a boost campaign. This is a campaign aimed at boosting (seasonal) products alongside your existing campaigns by excluding those products from your Labelizer Strategy.

In this article, you will learn how to create a boost campaign alongside your Labelizer Strategy.

Some examples of products that can be included in a boost campaign are sale products, newly added products (like the new Winter collection) or holiday-related products like Christmas trees or Halloween costumes, which are normally sold for a certain period of time.   

Optimize Your Campaign Structure Based on Data Volume

To summarise, it’s vital to consider the volume of data flowing through your account as it plays a crucial role in determining the most effective campaign structure. We have seen many advertisers that already got great results by moving the Zombies or Villains to a separate campaign. But as with everything in advertising, it’s good to test what works for you.