Why Demand Gen Matters in 2025

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Demand Gen is shaping up to be a critical campaign type in Google Ads, especially as search behavior changes and competition for high-intent traffic intensifies. If you're not already testing it, you're leaving opportunities on the table.

Recently I sat down with Thomas Eccel, who is known as the "Demand Gen Whisper", to break down what's new, how to optimize campaigns, and why this format is becoming essential for advertisers.

The Big Demand Gen Updates You Need to Know

Google has finally rolled out some much-needed updates to Demand Gen, giving advertisers better control over placements and campaign performance.

Here are the key changes:

1. Channel Control

Previously, Demand Gen campaigns would automatically spread budget across YouTube, Discover, Gmail, and Shorts without transparency into how much was allocated where.

Now, advertisers can target specific placements at the ad group level—meaning you can run Shorts-only, YouTube in-feed, or Discover-only campaigns. This is a game changer for advertisers looking to refine their strategy and avoid wasted spend.

2. Video Action Campaign Migration

Starting in April 2025, you will no longer be able to create new Video Action campaigns. By July 2025, all existing Video Action campaigns will be migrated into Demand Gen. If you’re running Video Action, now is the time to familiarize yourself with Demand Gen and ensure your campaigns transition smoothly.

3. Better Conversion Tracking and Reporting

Demand Gen now includes a "Conversion Campaign Type" column, which introduces view-through conversions (VTCs) into reporting.

This makes Demand Gen performance easier to compare with Meta and TikTok ads. Keep in mind that VTCs are not a new conversion action but rather an additional data column.

4. Optimized Audience Targeting

With a better understanding of which audience segments are driving conversions, advertisers can now fine-tune their targeting strategies. However, optimized targeting should be turned off if you want to maintain full control over your audience segmentation.

How to Structure Your Demand Gen Campaigns for Success

A common mistake advertisers make is treating Demand Gen like Performance Max or Display.

The reality?

Demand Gen should be a single, high-budget campaign type, leveraging multiple ad groups to segment audiences effectively.

For E-Commerce:

• Start with one Demand Gen campaign with 5-10 ad groups (or less if you have a small amount of products).

• Each ad group should have a distinct product grouping (e.g., different brands or categories).

• Bidding strategy: Avoid Max Clicks—start with Max Conversions or Target CPA. (remember in most cases this will be a secondary campaign)

• Watch for any micro-conversion actions like Add to Cart and then build into extra optimisations once you see some Purchases.

• Budget: At least €50/$50 per day; ideally €200+ for faster optimization.

For Lead Generation:

• Start with Search > PMAX > Demand Gen (don’t start with Demand Gen first).

• Use separate ad groups for image vs. video ads for better control.

• Use historical Meta or TikTok campaign performance as a benchmark.

• Seed lists: At least 1,000 first-party data points for effective lookalike audiences.

• Ensure your conversion tracking is airtight, especially if offline conversions aren’t available.

Optimizing Demand Gen: What Actually Works

Once Demand Gen is up and running, the real work begins.

Here’s how to fine-tune performance and avoid common pitfalls:

1. YouTube Placement Exclusions

Think of YouTube placements like search terms in a Search campaign. Use filters to identify and exclude placements that cost significant spend but deliver no conversions.

Bulk exclusion is now possible within Google Ads.

2. Audience Segmentation Optimization

• Check which audience segments are driving actual conversions.

• If lookalike audiences have a high conversion rate but low spend, break them into their own ad group to allocate more budget.

• If no audiences are performing well, test a lookalike-only Demand Gen campaign with broad targeting.

3. Creative Strategy for Demand Gen

• Shorts Ads: Hook viewers in the first 3 seconds with a clear value proposition.

• Ad Copy Testing: Test different variations in separate ad groups rather than lumping all assets together.

• Creative Optimization: If an ad format performs well, work with your creative team to develop similar assets.

4. Running Demand Gen with Performance Max

• Monitor where PMAX is spending (e.g., more on Shopping or Search? If so, there’s room for Demand Gen).

• Turn off optimized targeting in Demand Gen to avoid audience overlap with PMAX.

• Use different creatives in Demand Gen vs. PMAX to prevent internal competition.

Why You Should Start Testing Demand Gen Now

If you’re still waiting to test Demand Gen, you might be behind.

Here’s why:

• Search is becoming more transactional. Users are doing research elsewhere (TikTok, ChatGPT, Reddit) before arriving at Google to purchase. This increases CPCs for high-intent traffic.

• YouTube Shorts is exploding. Demand Gen gives you access to this rapidly growing inventory at a lower cost.

• Google is all-in on Demand Gen. The fact that Video Action is being phased out means Google sees this as the future of video-based advertising.

• AI-driven ad placements are evolving. Performance Max will likely become even more automated, currently Demand Gen gives some better options for advertisers who still want extra levels of control.

Final Thoughts

Demand Gen isn’t just another campaign type—it’s Google’s biggest push into the mid-funnel / top-funnel advertising space.

If you’re already running Meta or TikTok ads, it makes sense to allocate budget here. Start testing Demand Gen before your competitors figure it out and CPCs rise.

Have a great week,

Aaron

• Monday 17th February, 8pm AEST: The Best Way To Use Demand Gen In 2025
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