Google Demand Gen Campaigns: What They Are, How to Set Them Up, and When to Use Them Instead of PMax

Most Google advertisers are running Search and Performance Max, calling it a full-funnel strategy, and wondering why their pipeline dries up the moment branded demand softens. They’re capturing intent. They’re not creating it.

That’s exactly what Google Demand Gen campaigns were built for — and in 2026, they’re still the most underdeployed campaign type in the average Google Ads account. Not because they don’t work. Because most advertisers don’t understand what they are or how to run them correctly.

This guide fixes that.

What Google Demand Gen Campaigns Actually Are (And What They’re Not)

Demand Gen launched as the successor to Discovery campaigns, but calling it a rebranded Discovery is underselling it. Google extended the inventory to include YouTube in-stream, YouTube Shorts, Google Discover, and Gmail — all under one campaign type, all serving visually rich ad formats.

The core philosophy is different from the rest of Google’s portfolio. Search campaigns capture people who are already looking for what you sell. Performance Max tries to find converters across every Google property by optimizing toward a conversion signal. Demand Gen is designed to generate demand — to put your brand in front of audiences who match your buyer profile before they’ve ever typed a query.

Think of it the way you think about paid social. Your Meta campaigns aren’t waiting for someone to search. They’re interrupting the scroll with something compelling enough to earn attention. Demand Gen is Google’s answer to that model, using Google’s own interest and behavioral data to do the targeting instead of social graph signals.

That framing matters, because if you approach Demand Gen like a Search campaign — obsessing over query-level control and direct conversion efficiency — you’ll kill it before it has a chance to work.

Demand Gen vs PMax: The Honest Comparison

This is the question we get asked constantly, and the answer isn’t “one is better than the other.” They’re built for fundamentally different jobs.

Performance Max is fully automated. You hand Google your creative assets, your conversion goals, and your budget — and the algorithm decides where to show ads across Search, Shopping, Display, YouTube, Discover, and Gmail simultaneously. You get minimal transparency into what’s actually working. If you want to understand PMax in depth, the Performance Max complete guide for 2026 covers the full picture, including what Google won’t tell you upfront.

Demand Gen gives you back control in a few critical ways:

• Placement-level control. You can exclude YouTube channels, specific URLs in the Discover network, and Gmail placements you don’t want.
• Audience-first targeting. You build your targeting around audiences — custom intent segments, customer match lists, lookalike segments based on your converters — rather than handing it entirely to the algorithm.
• Creative format separation. You can test image ads vs. video ads vs. Shorts ads independently and understand what’s actually driving performance.
• Dedicated funnel position. Demand Gen is explicitly mid-to-upper funnel. You’re not competing with your own Search campaigns for bottom-funnel budget.

Here’s the practical rule we use across client accounts: PMax when you need scale and have clean conversion data. Demand Gen when you need audience-controlled reach and creative testing across visual inventory.

Running both together is often the right call. PMax captures and converts. Demand Gen builds the audience pool that makes PMax and Search more efficient over time.

Demand Gen Campaign Setup: The Non-Negotiable Foundations

Before you touch bidding or creative, get these foundations right. Skipping them is why most Demand Gen campaigns underperform out of the gate.

Conversion Tracking Has to Be Airtight

Demand Gen’s smart bidding depends entirely on the quality of your conversion signal. If you’re importing GA4 goals with all their session-based, deduplication issues, you’re giving the algorithm garbage to learn from. Use Google Ads native conversion tracking, tag-based, with proper deduplication settings. Most accounts have conversion tracking problems they don’t know about — audit yours before you launch.

Build Audience Signals That Actually Represent Your Buyer

This is where Demand Gen earns its edge over PMax. You have three main audience tools:

• Custom segments: Build these around competitor website visitors, relevant app users, or people who’ve searched specific keywords. A custom segment targeting people who’ve visited competitor pricing pages is a different audience than someone with a general interest in your category.
• Customer Match: Upload your CRM list. Converters, churned customers, trial users — segment them and use them as seed audiences for lookalikes.
• Lookalike segments (Optimized Targeting): Google will expand beyond your uploaded audiences to find similar users. Start with a tight seed list — your actual purchasers or highest-LTV customers — and let it expand from there.

For deeper audience layering strategy, this guide on audience targeting in Google Ads covers the layered approach most accounts never implement.

Campaign Structure: Don’t Bundle Everything

Run separate ad groups for your different audience types — remarketing lists, customer match, custom segments, and lookalikes. If you bundle them all into one ad group, you lose the ability to see which audience is actually performing and you can’t bid or budget differently between them. The same logic that governs good Google Ads account structure applies inside Demand Gen.

Creative Asset Requirements: Where Demand Gen Campaigns Actually Win or Lose

There’s no keyword list to optimize here. Creative is everything. Weak creative will drain your budget and generate mediocre engagement no matter how good your audience signals are.

Image Ads

You need both landscape (1.91:1) and square (1:1) formats. Google will mix these depending on placement. Minimum resolution is 600×314 for landscape and 300×300 for square, but in practice you want 1200×628 and 1200×1200. Use high-contrast visuals, minimal text overlay, and a single dominant visual element. Cluttered creative dies on Discover.

Video Ads

Demand Gen accepts in-stream and non-skippable formats for YouTube, plus vertical 9:16 for YouTube Shorts. The Shorts placement deserves its own creative — horizontal video repurposed to a Shorts vertical format performs noticeably worse than native vertical content. Hook in the first two seconds. Viewers on Shorts are scrolling fast; you have roughly one second before they’re gone.

Carousel Ads

A Demand Gen-specific format that lets you show 2–10 cards, each with its own image, headline, and URL. Excellent for ecommerce (show multiple products) and for SaaS (walk through a feature set). Most accounts never use this format. That’s a missed opportunity.

Asset Quantity

Upload the maximum number of assets Google allows. This isn’t about padding — it’s about giving the algorithm material to work with. Limit your creative inputs and you’re capping the algorithm’s ability to find the best combinations. Test at least three distinct creative concepts per ad group, not just color variations of the same idea.

Bidding Strategy for Demand Gen Campaigns

Google offers four bidding options for Demand Gen: Maximize Clicks, Maximize Conversions, Target CPA (tCPA), and Target ROAS (tROAS). Here’s how to think about each one.

Maximize Clicks makes sense only if you’re in early awareness mode and want traffic volume to build remarketing lists. Don’t use it if you have any meaningful conversion history — you’ll pay for clicks that go nowhere.

Maximize Conversions is the right starting point for most new Demand Gen campaigns. It lets the algorithm spend your budget to drive as many conversions as possible without a constraint. Run this until you’ve accumulated at least 30–50 conversions in the campaign over a 30-day period.

Target CPA is where most campaigns should graduate to after that initial learning period. Set your tCPA 20–30% above your actual target to start — a tCPA that’s too aggressive will strangle delivery before the algorithm can explore. For a deeper breakdown of when tCPA vs tROAS makes sense across campaign types, this tCPA vs tROAS decision framework is worth reading before you set targets.

Target ROAS is appropriate for ecommerce accounts with strong conversion value data and 50+ conversions per month in the campaign. Don’t rush to tROAS — campaigns set at tROAS too early tend to underspend and never learn properly.

One firm rule: don’t touch bidding during the learning period. The algorithm needs roughly two weeks of consistent data after any significant change. Adjusting too early is the most common reason Demand Gen campaigns fail to exit learning mode.

Measurement: How to Evaluate Demand Gen Performance (Without Comparing It to Search)

The biggest mistake we see is evaluating Demand Gen campaigns using the same metrics and expectations as Search. A Demand Gen campaign running to cold audiences should not have the same CPA as a branded Search campaign. That’s not a failure — that’s two completely different funnel stages doing different jobs.

Here’s how to measure Demand Gen correctly:

Primary metrics (direct response view): Cost per conversion, conversion rate, and cost per view/engagement. These tell you if your creative is connecting and if the campaign is driving business results.

Assisted impact: Check your Search lift — are users exposed to Demand Gen ads more likely to search your branded terms or convert through Search later? Google’s attribution reports and Search lift studies (available for larger budgets) can quantify this. It’s real, and it’s often significant.

Audience list growth: Is Demand Gen feeding your remarketing lists? Track the size of your YouTube viewer lists, website visitor lists from Demand Gen traffic, and customer match match rates. These downstream audiences make your PMax and Search remarketing more efficient.

Don’t make budget decisions based on a single week of data. Demand Gen needs 4–6 weeks to stabilize after launch. If you’re pulling the plug at day 10 because tCPA looks high, you’re not giving the algorithm enough runway — and you’re probably missing the downstream value that’s harder to see in a 30-day attribution window.

Where Demand Gen Fits in a Modern Google Ads Account

The accounts we see performing best in 2026 have a layered structure that looks something like this:

• Search campaigns: Capturing high-intent, in-market queries. Exact and phrase match with tight negative keyword lists.
• Performance Max: Broad conversion capture across all Google inventory, especially for Shopping-heavy or multichannel objectives.
• Demand Gen: Audience-first, visual-format campaigns building brand awareness, feeding remarketing pools, and warming cold audiences before they hit Search.

Demand Gen doesn’t cannibalize Search. When structured properly — with your Search campaigns capturing branded and high-intent terms, and Demand Gen reaching net-new audiences — they reinforce each other. Users who’ve seen your Demand Gen ads convert at a higher rate when they eventually reach your Search ads. That’s not a theory; it shows up in your data if you look for it.

For ecommerce and SaaS accounts specifically, Demand Gen is one of the most underutilized tools available for full-funnel growth. If your account is entirely bottom-funnel and you’re wondering why scaling spend past a certain threshold stops working, this is usually a large part of the answer.

Frequently Asked Questions

What’s the difference between Demand Gen and Discovery campaigns?

Discovery campaigns were the predecessor — limited to Discover feed and Gmail placements, with only image-based creative. Demand Gen expanded the inventory to include YouTube in-stream, YouTube Shorts, and added video creative support, carousel formats, and lookalike audience capabilities. Google fully retired Discovery in 2024, so if you’re still seeing references to it, they’re outdated.

How much budget do you need for a Demand Gen campaign?

We’ve seen Demand Gen work with as little as $50/day, but the algorithm learns faster with more headroom. A realistic starting budget is $75–$150/day per campaign, giving the bidding algorithm enough spend volume to exit learning mode within the first two to three weeks. If you’re on tCPA bidding, budget at minimum 10x your target CPA per day.

Can Demand Gen campaigns run without video?

Yes — you can run Demand Gen with image assets only and skip the YouTube in-stream placements. Your ads will still appear on Discover and Gmail. That said, you’re leaving significant YouTube inventory on the table, and YouTube Shorts is one of the fastest-growing placements in the network right now. If you don’t have video, even a simple motion graphic or slide-style video outperforms static images on YouTube inventory.

Should I use Demand Gen or Performance Max for a brand awareness goal?

Demand Gen. PMax is optimized toward conversion events — that’s its job. If you’re explicitly trying to drive reach, brand recall, and audience growth rather than direct conversions, Demand Gen’s placement controls and audience-first structure make it more suitable. You can set Demand Gen to Maximize Clicks or optimize toward video views if your primary goal is awareness-stage reach.

How does Demand Gen lookalike targeting work?

When you enable Optimized Targeting or upload a Customer Match seed list, Google builds a lookalike model based on the characteristics of your uploaded audience. It then serves your ads to users who share similar signals — browsing behavior, app usage, content consumption patterns — without you having to define interest categories manually. The quality of your seed list matters enormously here. A seed list of 500 actual customers produces better lookalikes than a list of 50,000 loosely qualified leads.

Do Demand Gen campaigns work for B2B?

Yes, but your approach has to be realistic. B2B Demand Gen works best for mid-funnel content offers — reports, webinars, case studies — rather than pushing a demo directly to cold audiences. Build your custom segments around competitor visitors and in-market professional audiences, use your CRM list as a seed for lookalikes, and measure success by downstream pipeline contribution rather than direct CPA. The sales cycles are long; expect to see the impact in weeks five through twelve, not week one.