Google Ads Demand Gen campaigns: a practical guide for 2026

What Demand Gen actually is (and what it replaced)

Demand Gen is a Google Ads campaign type that shows image and video ads across YouTube (in-feed, in-stream, and Shorts), Gmail, and the Google Discover feed. It replaced Discovery campaigns in late 2023, and the migration has been complete since early 2024.

The name hints at its purpose. Unlike Search campaigns, which capture existing intent, Demand Gen is designed to create demand. You are putting your brand in front of people who are not actively searching for what you sell, but who match the profile of someone who might.

If you ran Discovery campaigns before, the core concept is the same: visual ads served on Google's owned properties. But Demand Gen added several important features. You now have access to YouTube Shorts inventory, Lookalike segments (though those are being phased out, more on that later), and more flexible bidding options including Maximize Clicks.

The key difference between Demand Gen and Performance Max is scope. Performance Max runs across all Google surfaces including Search, Shopping, Display, YouTube, and Maps. Demand Gen only runs on YouTube, Gmail, and Discover. That narrower scope gives you more control over where your ads appear and which audiences see them.

When Demand Gen makes sense (and when it does not)

Demand Gen is not for every advertiser. It works best in specific situations, and using it in the wrong context is one of the most common reasons campaigns fail.

Use Demand Gen when: you have strong visual creative (video or high-quality images), a product or service that benefits from awareness building, a reasonable budget (at least $75 per day per campaign), and solid conversion tracking in place. It is particularly effective for e-commerce brands launching new product lines, SaaS companies running top-of-funnel acquisition, and B2B companies with longer sales cycles that need to warm up prospects before they reach the search phase.

Skip Demand Gen when: your budget is tight and every dollar needs to go toward capturing existing demand, you only have static text-based creative, or your conversion tracking is unreliable. If your monthly Google Ads budget is under $3,000 total, you are almost certainly better off putting everything into Search and Shopping before adding Demand Gen to the mix.

The advertisers who get the most out of Demand Gen typically already have a healthy Search campaign generating consistent conversions. They add Demand Gen to fill the top of the funnel and build awareness with audiences that will later convert through Search or direct traffic.

Setting up your first Demand Gen campaign

The setup process is straightforward, but there are a few decisions that matter more than they appear in the interface.

Step 1: Choose your campaign objective. Select Sales, Leads, or Website Traffic. For most performance marketers, Sales or Leads is the right choice because it unlocks conversion-based bidding. If you just want to test the waters and gather initial data, Website Traffic with Maximize Clicks works too.

Step 2: Select Demand Gen as your campaign type. Google will ask you to pick between a standard Demand Gen campaign and a Demand Gen campaign with a product feed. If you are running e-commerce and have a Google Merchant Center feed connected, choose the product feed option. It lets you show dynamic product ads alongside your image and video creative.

Step 3: Set your geographic and language targeting. Keep this tight. Broad geographic targeting dilutes your budget across audiences with wildly different intent levels. Start with your best-performing markets and expand from there.

Step 4: Build your ad group. Each ad group should have a clear theme and audience. Do not dump all your audiences into a single ad group. Separate by audience type (first-party vs. interest-based vs. custom segments) so you can see what is actually working.

Step 5: Create your ads. You can create single image ads, video ads, or carousel ads. Video tends to perform best on YouTube placements, while image carousels work well on Discover and Gmail. Provide multiple asset variants so Google's algorithm can test combinations.

Audience targeting: what changed and what works now

Audience targeting is where Demand Gen campaigns are won or lost. The landscape shifted significantly in 2025 with the Lookalike segment sunset, and understanding the current options is critical.

First-party audiences. Your best starting point. Upload customer lists, create website visitor segments, or use app activity data. These signals tell Google exactly who your ideal customer looks like. The larger your seed list, the better the algorithm performs. Aim for at least 5,000 users in your seed audience.

Custom segments. Build audiences based on search terms people have used, URLs they have visited, or apps they have used. This is one of the most underused features in Demand Gen. You can target people who searched for competitor terms or visited competitor websites, creating a prospecting layer that sits between first-party retargeting and broad interest targeting.

Google audiences. These are pre-built segments based on interests, life events, and in-market signals. They are the broadest targeting option and work best when layered on top of more specific signals. Use affinity audiences for awareness goals and in-market audiences when you want to reach people closer to a purchase decision.

The Lookalike sunset. Google started phasing out Lookalike segments in March 2025. If you were relying on them, the transition to optimized targeting is the intended replacement. Optimized targeting uses your existing audience signals as a starting point but lets Google expand beyond those boundaries to find additional converters. Early results have been mixed. Some advertisers see comparable performance, while others report higher CPAs. The key factor seems to be seed audience quality: strong first-party data leads to strong optimized targeting results.

A practical approach is to run two ad groups in the same campaign. One with tight first-party audiences and custom segments (optimized targeting off), and one with the same audiences but optimized targeting enabled. Compare performance over two to four weeks and let the data guide your decision.

Bidding strategies: which one to pick and when to switch

Demand Gen supports three bidding strategies, and choosing the right one depends on where your campaign is in its lifecycle.

Maximize Clicks. Use this to launch a new campaign and build initial data. It optimizes for the cheapest clicks, which gets traffic flowing and gives the algorithm data to learn from. Run this for two to four weeks or until you have accumulated at least 30 to 50 conversions. Then switch.

Maximize Conversions. The workhorse strategy for most Demand Gen campaigns. Once you have enough conversion data, this tells Google to find more people likely to convert. Do not add a target CPA right away. Let the algorithm run uncapped for one to two weeks to find its baseline, then layer in a target CPA that is 10% to 20% above the observed average.

Maximize Conversion Value. If your conversions have different values (for example, different product prices or lead quality tiers), this is the better option. It works the same way as Maximize Conversions but optimizes for total value instead of volume. Set a target ROAS only after the campaign has enough data to establish a baseline.

The most common bidding mistake with Demand Gen is setting aggressive targets too early. The algorithm needs data to learn, and constraining it before it has enough signal leads to limited spend, inconsistent delivery, and poor results. Give each bidding strategy at least two weeks of stable performance before making changes.

Creative that actually works on Demand Gen

Your creative is doing the heavy lifting in Demand Gen campaigns. Unlike Search, where the user already has intent and your ad just needs to match it, Demand Gen ads need to interrupt, engage, and persuade users who were doing something else.

Video. YouTube Shorts (vertical 9:16) is where the most impressions are going right now. Keep videos between 15 and 30 seconds. Lead with your strongest hook in the first three seconds because that is the window before someone scrolls past. Show the product or solution within the first five seconds. End with a clear CTA. Talking-head formats work well for B2B. Product demos work well for e-commerce.

Images. High-quality lifestyle images outperform stock photos by a wide margin. Use square (1:1) and landscape (1.91:1) formats. Include your logo and a text overlay with the primary value proposition. Keep text minimal. Google's own data shows that images with less than 20% text coverage perform better across their visual surfaces.

Carousels. Underrated format, especially for e-commerce. Show a product range, tell a visual story, or walk through a process step by step. Each card should work both as part of the sequence and as a standalone image, because not everyone will swipe through all of them.

Headlines and descriptions. Write multiple variants. Google will test combinations of your headlines and descriptions with your visual assets. Your headline should address a specific pain point or outcome. Your description should provide just enough context to make the CTA feel natural. Avoid generic marketing speak. Performance marketers can smell it a mile away.

Provide at least five headline variants, five description variants, and three to five visual assets (mix of images and video). More variants give the algorithm more room to optimize. Refresh your creative every four to six weeks to combat ad fatigue.

Budget allocation and what to expect

Demand Gen is a mid- to upper-funnel play, and it should be budgeted accordingly. Most advertisers allocate 10% to 20% of their total Google Ads budget to Demand Gen, with the majority still going to Search and Shopping.

Google recommends a daily budget of at least 15x your target CPA. If your target CPA is $50, that means $750 per day. In practice, you can start lower than that recommendation and still get results, but going below $75 per day for a single campaign makes it hard for the algorithm to exit the learning phase.

What to expect in the first month. CPAs will be higher than your Search campaigns. This is normal. Demand Gen targets users earlier in the funnel, so the direct conversion rate is lower. The value shows up in assisted conversions and view-through conversions. Check your Google Ads attribution reports and GA4 conversion paths to see the full picture.

How to measure success. Do not judge Demand Gen solely on last-click CPA. Look at new user acquisition rate, view-through conversions, branded search volume lift, and the overall cost per acquisition across your full Google Ads account. A well-run Demand Gen campaign often reduces CPAs in your Search campaigns because it warms up audiences before they search.

Tracking all of this across campaigns and channels gets complex quickly. That is the kind of cross-campaign budget tracking that remarketing strategies and Demand Gen campaigns both benefit from, and why having a single view of your ad spend matters as you scale.

Frequently Asked Questions