Google Ads Demand Gen Campaigns: The Display Replacement You Should Know

Demand Gen is Google's relatively new campaign type, replacing Discovery Ads and incorporating YouTube Shorts placements. It's positioned as Google's answer to Meta and TikTok for visual, mid-funnel discovery.

For e-commerce operators, Demand Gen is increasingly worth a budget allocation. Here's what it does and how to use it.

What Demand Gen is

Demand Gen campaigns serve ads in Google's "discovery" surfaces:

• YouTube feed (the home tab, watch next, Shorts).
• Gmail Promotions tab.
• Google Discover (the app feed on Android, in Google Search app).

These are visual, scroll-based feeds — different from intent-driven Search and Shopping.

When Demand Gen wins

Demand Gen works for:

• Visually-driven products. Beauty, fashion, home goods, lifestyle.
• Brand awareness expansion. Reaching users earlier in the buying journey.
• Mid-funnel. Users who've seen your brand on social or search but haven't converted.
• Replacing or supplementing Display campaigns that aren't performing.
• Audience expansion when search audiences are saturating.

When Demand Gen fails

Less effective when:

• Your product is complex or B2B. Visual storytelling works better than feature lists; complex sales rarely close from a Discovery feed.
• You don't have strong creative. Demand Gen lives or dies on visuals.
• You're trying to drive immediate conversion. This is mid-funnel, not bottom.
• Your brand has no awareness in the audience. Cold prospecting on Demand Gen requires good production to work.

Setting up Demand Gen

In Google Ads:

1. New campaign → "Drive conversions" or "Sales" objective → Demand Gen.
2. Set bid strategy:
   • Maximize Clicks: for traffic objectives.
   • Maximize Conversions: when starting out.
   • Target CPA: once you have conversion data.
3. Set audiences:
   • In-market.
   • Custom audiences.
   • Customer Match.
   • Lookalike (created from existing audiences).
4. Upload creative:
   • Square images (1:1).
   • Vertical images (4:5).
   • Landscape images (16:9, with zoom-in safety zones).
   • Vertical videos (9:16) for Shorts placements.
   • Horizontal videos (16:9).
   • Multiple aspect ratios per ad set for cross-placement flexibility.
5. Write headlines and descriptions (similar to Performance Max).

Creative for Demand Gen

Demand Gen creative resembles social ads more than traditional display:

• Strong visual hook. Stop the scroll.
• Lifestyle context. Show product in use, not just on white background.
• Faces. Human faces outperform product-only shots in Demand Gen feeds.
• Aspirational tone. Discovery surfaces favor inspiration over hard sell.
• Captions on video. Sound-off viewing common.

Common formats that work:

• UGC-style video.
• Lifestyle photography with strong color.
• Carousel-style Demand Gen ads (multi-image cards).
• Before/after transformations.
• Tutorials and demos.

Audience strategy

Demand Gen rewards strong audience signals:

Lookalike audiences

Demand Gen has its own lookalike system. Build from:

• Customer Match (top customers).
• Past website visitors (highest LTV segments).
• Past purchasers.

Lookalikes typically perform better in Demand Gen than purely interest-based targeting.

Custom audiences

Built from search behavior, URL visits, app usage. Useful for targeting researchers in your category.

In-market audiences

Active researchers. Strong intent for Demand Gen prospecting.

Customer Match

Existing customers for upsell/cross-sell. Excluded from acquisition campaigns.

Bid strategy

For Demand Gen:

• New campaign: Maximize Conversions (let algorithm gather data).
• Established campaign: Target CPA or Maximize Conversion Value.
• Brand-awareness focus: Maximize Clicks (not recommended for direct response).

After 30 conversions in 30 days, switch to value-based bidding.

Demand Gen vs Display vs Performance Max

Three Google channel types for visual ads:

Demand Gen

• Surface: YouTube feed, Gmail, Discover.
• Targeting: granular audience signals.
• Best for: mid-funnel discovery.
• Control: medium.

Display

• Surface: Google Display Network (websites, apps).
• Targeting: keywords, topics, placements, audiences.
• Best for: retargeting, broad reach.
• Control: high (but more work).

Performance Max

• Surface: all of Google (Search, Shopping, Display, YouTube, Demand Gen surfaces).
• Targeting: audience signals, automatic.
• Best for: holistic acquisition.
• Control: low (algorithm-driven).

For an e-commerce account, common allocation:

• Performance Max as primary.
• Demand Gen as secondary for visual discovery.
• Display retargeting for site visitors.
• Standalone Search for brand and high-intent generic terms.

Demand Gen and YouTube Shorts

Shorts placements within Demand Gen are growing fast. They:

• Reach younger, mobile-heavy audiences.
• Have lower CPMs than YouTube long-form.
• Reward vertical video native to the format.

Provide vertical video creative (9:16) to capture Shorts inventory. Repurpose Reels/TikTok content if available.

Measurement

Demand Gen attribution challenges:

• Visual discovery ads often drive view-through conversions (user saw ad, converted later through another channel).
• Cross-device behavior (Discover on Android, conversion on desktop).

For attribution:

• Use data-driven attribution (DDA) when conversion volume supports it.
• Track view-through but don't over-weight.
• Cross-check Demand Gen ROAS against MER for true contribution.

Budget allocation

For an account spending $50K/month total on Google Ads:

• Performance Max: $25-30K.
• Search (brand + generic): $10-15K.
• Demand Gen: $5-8K.
• Display retargeting: $3-5K.

Demand Gen 10-15% of budget is a reasonable starting allocation.

Common Demand Gen mistakes

• Treating like Display. Demand Gen is visual feed; Display is contextual placements. Different creative approach.
• Weak creative. Static product shots on white. Doesn't work in feed surfaces.
• No mobile optimization. Most Demand Gen impressions are mobile; non-mobile-optimized creative loses.
• Ignoring Shorts inventory. 9:16 video access is the easy win.
• Cold prospecting only. Always include retargeting in Demand Gen alongside prospecting.

Performance benchmarks

For Demand Gen campaigns:

• CPM: $4-$15 (lower than YouTube long-form, similar to Display).
• CTR: 0.5-2% (varies wildly by creative).
• Cost per conversion: 1.5-2.5x your search baseline.
• ROAS: 1.5-3x typical for cold prospecting; 3-5x for retargeting.

Demand Gen rarely outperforms search ROAS, but it brings volume that search can't (users who haven't yet searched).

A 30-day Demand Gen test

If you've never tested Demand Gen:

• Days 1-7: Produce 6-10 creative assets (mix of square, vertical, video).
• Days 8-14: Launch Demand Gen campaign with $30-50/day budget. Use lookalike + in-market audiences.
• Days 15-21: Iterate on creative based on early performance signals.
• Days 22-30: Evaluate. Compare CPA and ROAS to alternative channels.

For most accounts, a clean Demand Gen test produces results competitive with social ads. The differentiator is creative — strong assets win, weak assets fail across all platforms.

What "good" looks like

A working Demand Gen setup:

• 8+ active creative assets (mix of static, video, vertical, square).
• Strong audience signals (Customer Match, custom, in-market).
• ROAS within 30% of paid social benchmark.
• Steady spend that doesn't cannibalize search.
• Quarterly creative refresh.

Demand Gen isn't the channel that'll make or break your business. But it's the channel that brings incremental volume at acceptable economics — and most accounts that ignore it leave easy revenue on the table.