This error does not stop you from running paid ads campaigns. Your products are also still listed in the “free listings” program, although the performance might be affected. That is why we should strive to solve it.
More information from Google about this error is here.
Unfortunately, Google does not publicly share the exact criteria used to determine eligibility. The issue could be related to the quality or completeness of your feed data, the status of your Merchant Center account (for example, if it's newly created), or even the specific market you are targeting with the feed.
First we can try our best to be as informative about the products as we can. Data like color, material, sizes need to be submitted wherever possible. The app advanced features, including rule-based settings can help out to fill in the missing data.
And the eligibility changes over time too, so after updates to feed settings, give Google a few days to re-evaluate it.
