When to use them and best practices (with examples)

Demand Gen campaigns may be the newest addition to the Google Ads toolbox, but they haven’t received the same attention or hype as Performance Max. 

At the core is their divergence from Google’s long-standing focus on capturing existing demand – a model that makes attribution and ROI measurement straightforward.

Two years after the public launch, we’ve transitioned from the campaign being in beta to testing additional controls, including inventory selection.

Here’s what I’ve learned from being part of the initial release and using Demand Gen regularly over the past couple of years.

How Google Ads Demand Gen campaigns work

Like Performance Max, Demand Gen relies heavily on automation and machine learning to handle most of the heavy lifting. 

Both campaigns use algorithmic targeting, whereas previous campaigns, such as Search and Shopping were built around more specific targeting options.

But where Performance Max is a full-funnel campaign, Demand Gen (as the name implies) focuses largely on driving awareness and filling the top end of your funnel.

• Sidebar: When Demand Gen became available in October 2023, we gave up the ability to create Discovery campaigns. Since then, other inventories and campaign types have been absorbed into this new offering – most notably, video action campaigns from YouTube.

Using Performance Max without a data feed, and only creative assets with audience signals, is somewhat similar to what Demand Gen tries to do. 

The key difference is that Performance Max tends to over-index on mid-to-bottom funnel traffic.

That setup pushes out Image, Display, and Video ads across all the different networks (except for Shopping). 

It’s still more focused on bottom-of-funnel conversions than Demand Gen, whose primary goal is to create new demand.

With Demand Gen, you can still add your audiences, but also create lookalikes, which is something new to Google that anyone familiar with Meta Ads will recognize.

This works by seeding the system with a list – customers, email subscribers, people who take pixel-based actions on your website – and targeting people who closely match it.

It’s a good way of finding new audiences, which is exactly what Google has said Demand Gen seeks to do.

If we compare Demand Gen with its predecessor, the biggest differentiator is creative. 

Discovery only allowed creatives built using images, carousels of images, or your product data feed. 

Demand Gen lets you add video (standard YouTube videos and Shorts).

Demand Gen is Google’s way of helping advertisers create demand, not just capture it – something Google Ads has traditionally done as people search for what they already want.

It seems that’s a reputation they want to shake, because the interface now looks and feels more like a paid social campaign, with clear similarities to how Meta Ads structures its product.

However, Demand Gen will not do the best job of pushing someone from initial awareness straight to purchase.

You will see a lower reported ROAS than you would with a similar campaign on Meta. 

This is the nature of generating demand via different Google products (like YouTube or Gmail) instead of a social media platform.

Does that mean Demand Gen is actually driving less revenue? 

To be determined – you’ll have to look at third-party revenue and attribution tools to figure that out.

Demand Gen campaign use cases

Because of how this campaign works – and thanks to additions like channel controls – Demand Gen is flexible enough to support established accounts in almost any niche.

• Networks: Discover, Display, Gmail, and YouTube (In-feed, In-stream, Shorts)
• Targeting: Interests, Custom Segments, Demographics, First-Party Audiences, Site/App/YouTube Users, Device, Location & language, New customers, Optimized targeting, Lookalikes
• Ad formats: Single Image, Video, Carousel (all compatible with Merchant Center feeds)

My recommended order? 

• Search and/or Shopping.
• Performance Max.
• Meta (optional).
• Demand Gen.

Who should use Demand Gen and when?

Any account – big or small, new or old, ecommerce or lead gen, local service business or national retailer – can use Demand Gen to put their brands, services, and products in front of people with a non-immediate need for them.

But it’s also speculative by nature, which means there is no keyword targeting.

It doesn’t put you in front of people who are actively looking for the specific things that you offer.

Instead, it takes advantage of Google’s massive library of audience data points to find people who might be a fit. 

This is typically based on how their current and past search behavior aligns with your targeting settings, such as customer lists or selected interests.

This addresses latent demand versus the more active demand of keyword targeting in Search, Shopping, and other campaigns.

Because of this, I typically find it’s best to layer Demand Gen onto an account that has already captured as much search market share as possible – and possibly even more immediate demand on other channels, such as Meta.

By jumping straight into Demand Gen, you risk flooding the top of your funnel without seeing real ROI, which is a terrible way to start a Google Ads account.

The rare instance where it makes sense as a first step within Google Ads is for a Meta-first advertiser (such as DTC ecommerce) whose products don’t have sufficient search volume to make Search and Shopping worthwhile.

Dig deeper: The Google Ads Demand Gen playbook

Best practices for campaign and stakeholder management

Campaign management suggestions

Google has made recommendations for Demand Gen bidding and budget goals, which we’re still testing:

• Target CPA should be twice your standard campaign performance.
• Daily budget should be either 15 times your Target CPA.
• Or 20 times your average conversion value divided by Target ROAS.

These are the suggested benchmarks to give the campaign space to operate and find interested new audiences. 

But they mean that Demand Gen is effectively off-limits (or a money suck) for accounts and brands with smaller budgets.

Google’s other advice is to give Demand Gen between four and six weeks – both to factor in conversion delays and to allow for a data-gathering learning period.

Combined with their budget suggestions, the math often doesn’t work for smaller budgets.

Historically, Google has recommended setting your budget at five times your Target CPA, and we’ve found that approach works well for Demand Gen.

However, Demand Gen requires larger budgets to perform – much like YouTube Ads – so it may not be effective for most smaller campaigns.

Where we’re seeing Demand Gen fit is in an account that wants to layer something on top of its maxed-out Search, Shopping, and Performance Max campaigns. 

We’re still testing, but for smaller advertisers with limited budgets, it may not generate enough conversions to justify a long-term spot in the media mix.

Working with clients and leadership

As with any new Google campaign, getting clients and bosses on board with Demand Gen will be a challenge for many marketers.

Some clients love being part of beta programs and trying new things. They know that if you find a win before the rest of the market catches on, that first-mover advantage can pay off.

We’ve seen this with Performance Max and other Google betas, so we know which clients fit that mindset and pitch them accordingly.

For other clients – especially those with larger accounts – you should be testing new ideas anyway. At that scale, you need to keep unlocking new opportunities.

We try to use no more than 10% of the overall budget for testing new ideas on an ongoing basis. It could be:

• A new campaign of an existing campaign type.
• Testing new keywords in a Search campaign.
• Testing a new Performance Max setup.
• Any place we see or think there might be new opportunities.

It’s important to keep your testing budget to a reasonable figure, like 10% of overall spend, because experiments that go poorly can throw off your entire account’s performance.

Setting realistic expectations

Demand Gen is new, and its primary goal is to get in front of new audiences. 

So it’s fair to expect fewer conversions with a higher CPA or lower ROAS, and not necessarily measure this campaign the same way you would measure Search or Performance Max.