Demand Gen

Last updated: 6 August 2026

1. Executive Summary: Five Principles for Demand Gen in 2026

Google Ads Demand Gen has matured significantly since its introduction as a replacement for Discovery campaigns. As of August 2026, it is a full-funnel, AI-optimised placement spanning YouTube, Discover, Gmail, and the Google Display Network. The following five principles summarise everything that follows in this article.

• First-party data is the foundation. Every audience strategy — Lookalike segments, Custom segments, and remarketing — works best when seeded with high-quality first-party lists such as Customer Match, site visitors, and converters. Without strong seeds, the AI has nothing to learn from.^[3]
• Creative diversity drives performance. Google’s AI cannot optimise what it cannot test. Campaigns need at least three unique assets per aspect ratio (square, landscape, vertical), at least one video, and enough headline and description variation to let the system find the best combination per placement and audience.^[9]
• Bidding follows data maturity. Launch with Maximise Conversions, then migrate to target CPA (tCPA) or target ROAS (tROAS) only after accumulating at least 50 conversions. Running a CPA target before that threshold produces erratic performance.^[5]
• View-through conversions are a signal, not a success metric. Demand Gen’s multi-placement reach means many users convert after seeing — but not clicking — an ad. Pair view-through data with Conversion Lift studies, Brand Lift studies, or geo experiments before drawing conclusions about incremental value.^[4]
• Structure enables learning. Separate Lookalike, Custom segment, and remarketing audiences into distinct ad groups with tailored creative. This prevents audience cross-contamination, makes performance readable, and lets you scale what is working without disrupting what is not.^[8]

2. Benchmarks and Numbers at a Glance

All figures below are expressed in USD as published; apply an approximate AUD conversion of ×1.55 for budget planning in Australian markets. All vendor claims are from 2026 publications unless noted. Where ranges overlap between sources, the conservative (wider) range is shown.

Metric	Typical range or threshold	Applies when	Source
CTR — Demand Gen overall	0.50%–2.00%	Vendor claim; ecommerce accounts, all placements blended	[59]
CTR — first-launch / weak performance	0.35%–0.75%	Vendor claim; new campaigns in learning phase	[60]
CTR — average benchmark	0.75%–1.20%	Vendor claim; established campaigns with optimised creative	[60]
CTR — optimal target	1.50%–2.50%	Vendor claim; high-quality creative with strong audience match	[60]
CPC — Demand Gen overall	USD $0.30–$1.50	Vendor claim; ecommerce accounts, all placements blended	[59]
CPC — first-launch / weak	USD $2.00–$2.75	Vendor claim; new campaigns before creative or audience optimisation	[60]
CPC — optimal target	USD $0.40–$1.20	Vendor claim; mature campaigns with strong Ad Strength	[60]
CPM — Demand Gen overall	USD $2.80–$5.20	Vendor claim; blended placement average	[62]
CPM — YouTube only	USD $4.50–$8.00	Vendor claim; YouTube in-stream and in-feed within Demand Gen	[62]
CPM — Discover only	USD $3.20–$6.50	Vendor claim; Discover feed placements within Demand Gen	[62]
CPA — Demand Gen ecommerce	USD $15–$60	Vendor claim; ecommerce, wide range by vertical and funnel stage	[59]
Video view rate — YouTube/Demand Gen	31.9%	Study across thousands of accounts; blended YouTube/Demand Gen video inventory	[65]
CPV — YouTube/Demand Gen average	USD $0.026	Study across thousands of accounts; blended YouTube/Demand Gen video inventory	[65]
CTR — YouTube/Video overall average	0.65%	Study; YouTube/video campaign average, aligns with Demand Gen video inventory	[73]
Minimum conversions before switching to tCPA	50 conversions	Google Help Centre guidance; applies to all Demand Gen campaigns moving from Maximise Conversions	[5]
Minimum daily budget for tCPA campaigns	10× target CPA per day	Google Demand Gen performance guide; required for Smart Bidding learning headroom	[7]
Minimum seed list size for Lookalike segments	100 users	Vendor claim (Google Ads Help); minimum to generate a similar segment	[12]
View-through conversion window — default	1 day	Vendor claim (Google Ads Help); default setting for Demand Gen view-through attribution	[66]
Recommended images per asset group	4 images	Vendor claim (Google Ads Help); recommended minimum per Demand Gen asset group	[12]
Recommended YouTube videos per asset group	5 videos	Vendor claim (Google Ads Help); recommended minimum per Demand Gen asset group	[12]

3. What Demand Gen Is and When to Use It

Demand Gen is Google’s AI-powered campaign type designed to reach audiences who are not yet actively searching — people browsing YouTube, reading the Discover feed, or checking Gmail. Unlike Search, which captures declared intent, Demand Gen creates intent by surfacing relevant creative in high-attention, visually rich environments. It replaced Discovery campaigns in 2024 and has been expanded significantly through a series of “Demand Gen Drops” culminating in the June 2026 release.^[4]

Demand Gen sits in the middle and upper funnel. Its primary role is to move audiences from unawareness or passive interest toward consideration and first interaction. It is not a replacement for Search when demand already exists, and it is not a replacement for Performance Max when conversion efficiency across all Google inventory is the sole objective. It is, however, the best Google-native tool for social-style prospecting, lookalike expansion, and creative storytelling at scale.^[5]

When Demand Gen is the right choice

• You need to reach people who do not yet know they want your product — classic demand creation, not demand capture.
• You have strong creative assets (images and video) and want control over where they serve, including placement-level channel controls across YouTube, Discover, Gmail, and the Google Display Network.^[7]
• You want to run Lookalike-style prospecting using first-party data without committing to the full black-box nature of Performance Max.^[3]
• You are running an upper-funnel brand campaign alongside a lower-funnel Search or Shopping campaign and need a clearly separated prospecting layer.
• You want to test creative in a controlled experiment environment using Demand Gen experiments before rolling assets into Performance Max.^[4]

When Demand Gen is not the right choice

• Your sole objective is maximising conversion volume across all Google inventory — Performance Max is better suited.
• You have no video or high-quality image assets — the campaign will underperform without the creative diversity the AI needs.
• Your monthly budget is below the minimum needed for the learning phase (see Section 7 for the 10× CPA rule).

4. Campaign Setup and Goals

A well-structured Demand Gen campaign from the outset saves weeks of remediation later. Google’s February 2026 best-practices update identified four setup priorities: optimised targeting, Lookalike audiences, new customer acquisition goals, and robust data infrastructure.^[1]

Conversion goal configuration

Set your conversion goal before you set your bid strategy. For most accounts, the primary conversion action should be the same action used in Search and Shopping campaigns — purchase, lead form submission, or booking — so that the AI is optimising toward the same downstream value. If you are running Demand Gen for upper-funnel purposes, configure a micro-conversion (video view, page engagement, scroll depth) as a secondary action and measure brand lift separately.^[3]

New Customer Acquisition goal

If growth from new users is the primary objective, enable the New Customer Acquisition (NCA) goal and upload your existing customer list for exclusion in prospecting campaigns. This prevents the algorithm from burning prospecting budget on users who have already converted. Google explicitly recommends this configuration in its February 2026 guidance.^[1]

Data infrastructure

Before launching, confirm that sitewide tagging is implemented via the Google tag gateway, that conversion actions are firing correctly, and that any offline conversion data (CRM leads, in-store purchases) is connected through Google’s Data Manager.^[1] Demand Gen’s AI optimisation is only as good as the conversion signals it receives — poor tagging is the single most common cause of learning phase failure.

Campaign structure

Google recommends separating audiences with different strategies or creative angles into distinct ad groups.^[8] A practical three-ad-group structure is:

• Ad group 1 — Prospecting (Lookalike): Narrow Lookalike built from your highest-value converters. Creative should focus on awareness and brand story.
• Ad group 2 — Intent (Custom segment): Custom segment built from high-intent search terms and competitor/solution research behaviour. Creative should address the consideration stage.
• Ad group 3 — Remarketing: First-party site visitors and Customer Match warm re-engagement. Creative should focus on conversion-oriented messaging and offers.

Performance Planner

Use Performance Planner before setting budgets, particularly if you are running Demand Gen alongside Search or Performance Max. The tool models expected conversion volume at different spend levels and highlights the point of diminishing returns — critical for justifying budget allocation to stakeholders.^[1]

5. Creative and Ad Formats

Creative is the primary performance lever in Demand Gen. Because the campaign serves across visually diverse environments — YouTube pre-roll, Shorts, the Discover feed, Gmail promotions — no single creative executes well everywhere. Google’s guidance is explicit: use a diverse set of assets rather than a single creative angle, and target “Excellent” Ad Strength.^[1][9]

Required asset formats

Asset type	Recommended formats	Primary placement	Minimum recommended count
Image — landscape	1.91:1	Discover feed, Gmail	At least 1 per ad group
Image — square	1:1	Discover feed, YouTube in-feed	At least 1 per ad group
Image — portrait/vertical	4:5 or 9:16	YouTube Shorts	At least 1 per ad group
Video — horizontal	16:9	YouTube in-stream, in-feed	Included in 5-video target
Video — square	1:1	Discover, YouTube in-feed	Included in 5-video target
Video — vertical	9:16	YouTube Shorts	Included in 5-video target

Google recommends at least three unique assets per aspect ratio and a minimum of five YouTube videos per asset group.^[12] The June 2026 Drop introduced broader video aspect-ratio transformations — vertical to square, vertical to landscape, and square to landscape — reducing the production burden when only one video format is available.^[4]

Ad Strength and ABCD creative guidance

Ad Strength in Demand Gen reflects asset diversity, not a single ad’s quality. To reach “Excellent,” you typically need all recommended asset counts filled with genuinely different creative angles — not slight variations of the same image with a different colour filter. For video, follow Google’s ABCD framework: Attention in the first five seconds, Branding visible early, Connection with the audience’s problem or aspiration, and Direction — a clear CTA repeated in both voiceover and on-screen overlay.^[9]

Image quality standards

Google’s Demand Gen help page specifically recommends brand and inspirational imagery with minimal text and effective lighting.^[12] In practice, this means avoiding assets repurposed from static display banners with heavy text overlays — these consistently underperform in the Discover and YouTube in-feed environments, which reward editorial-quality photography and video.

Gemini-powered creative insights

The June 2026 Drop added Gemini-powered creative insights that surface recommendations for optimising image and video assets specifically for YouTube within Demand Gen.^[4] This tool is now available in the interface and should be reviewed after the first 14 days of a campaign’s life, once it has enough impression data to generate meaningful recommendations.

6. Audiences and Lookalike Segments

Audience strategy is where Demand Gen separates from generic display advertising. The campaign type’s AI can only work with the audience inputs it is given — vague or broad targeting produces vague and expensive results. The recommended 2026 structure uses three distinct audience layers, each in its own ad group, built outward from first-party data.^[3][8]

Lookalike segments

Lookalike segments in Demand Gen are built from first-party seed audiences: Customer Match lists, site visitors, app users, or conversion-based lists. The minimum seed size is 100 users, though in practice larger seeds (500 users or more) produce more stable lookalike models.^[12] Start with a narrow expansion setting before widening, so the early conversion data reflects a tighter audience match and gives the bidding algorithm cleaner signals to learn from.^[4][9]

Seed your Lookalikes with your highest-quality converters — not all site visitors. A Lookalike built from people who purchased above a $200 AUD threshold will behave very differently from one built from all site visitors who bounced after ten seconds. Multiple 2026 practitioner guides consistently make this point.^[4][11]

Custom segments

Custom segments let you reach people based on recent search behaviour and the websites or apps they have interacted with. This makes them the closest intent-based targeting option available inside Demand Gen, filling the gap between Lookalikes (similarity-based) and Search (declared intent).^[9][11] Use Custom segments to capture active researchers — people searching competitor brand names, category terms, or solution-category queries — and keep them in a dedicated ad group so their performance is readable independently of your Lookalike and remarketing groups.^[6][9]

First-party remarketing

Customer Match and site visitor remarketing lists form the warm re-engagement layer. These audiences already know your brand and typically convert at a lower CPA than cold prospecting. Keep them in a separate ad group with creative that assumes brand familiarity — promotional offers, product-specific messaging, and urgency-based CTAs — rather than the brand-story creative used for prospecting.^[4][9]

Optimised targeting

Google’s February 2026 guidance explicitly lists optimised targeting as a best practice for conversion-focused Demand Gen campaigns.^[3] Some practitioners recommend disabling it for tighter audience control, but this conflicts with Google’s current recommendation. The conservative approach, given the conflicting advice, is to leave optimised targeting enabled but monitor impression share by audience segment weekly to detect any unwanted audience drift.^[3][16][17]

7. Bidding Strategies

Demand Gen supports four bid strategies: Maximise Clicks, Maximise Conversions, target CPA (tCPA), and target ROAS (tROAS). The correct strategy depends on where the campaign sits in its data lifecycle, not on what the advertiser wishes to achieve. Applying tCPA to a campaign with 12 conversions is a common and costly mistake — the algorithm lacks sufficient data to bid efficiently and will either under-deliver or overspend to force volume.^[5]

Bidding strategy progression

Stage	Recommended strategy	When to move to next stage	Key condition
Launch (0–50 conversions)	Maximise Conversions	After 50 conversions recorded in the campaign	No tCPA target set; let the algorithm learn[5]
Efficiency (50+ conversions)	tCPA	After tCPA is stable for 2–3 weeks; conversion values are known	Set tCPA at or slightly above observed CPA to avoid under-delivery[5]
Value optimisation (stable tCPA)	tROAS	When conversion values are reliable and consistent	Requires accurate conversion value tracking; not suitable for lead-only goals[1]
Reach/awareness	Maximise Clicks or CPM-based	N/A — use when upper-funnel reach, not conversion volume, is the KPI	Pair with Brand Lift measurement; do not evaluate on CPA[4]

The 10× budget rule

Google’s Demand Gen performance guide states that the daily budget should be at least 10 times the target CPA when running tCPA bidding.^[7] This is not a recommendation — it is a functional threshold. Below this level, the Smart Bidding algorithm does not have enough budget headroom to explore the auction landscape, resulting in erratic CPAs and frequent under-delivery.

8. Placements: YouTube, Discover, and Gmail

Demand Gen serves across four surfaces: YouTube (in-stream, in-feed, and Shorts), the Discover feed, Gmail (Promotions and Social tabs), and the Google Display Network — the last of these was added progressively through 2025 and was confirmed in Google’s December 2025 Drop.^[7] Each surface has different creative requirements, audience behaviour, and performance benchmarks.

Placement-level benchmarks

Placement	CPM (USD)	CPC (USD)	CTR	Creative priority
YouTube (all formats)	$4.50–$8.00	$0.55–$1.20	1.2%–2.1%	Video-first; 16:9 + 9:16 Shorts
Discover feed	$3.20–$6.50	$0.45–$0.95	1.5%–2.8%	High-quality editorial images; 1.91:1 and 1:1
Gmail	Part of blended $2.80–$5.20	Part of blended $0.30–$1.50	Part of blended 0.5%–2.0%	Subject-line equivalent headline; image secondary
Blended (all placements)	$2.80–$5.20	$0.30–$1.50	0.5%–2.0%	Diverse asset set across all formats

Sources for table: ^[59][62]

Channel controls

Channel controls allow advertisers to restrict which surfaces a Demand Gen campaign serves on. This is particularly useful when creative is only available in one format (for example, only video assets) or when a specific placement is consistently delivering below-benchmark CPAs that distort overall performance reporting.^[1][7]

In practice, the most common channel control decisions are:

• Exclude Gmail when the campaign is video-only and there are no high-quality image assets — Gmail renders primarily as an image-led email-style unit.
• Exclude YouTube Shorts if no 9:16 vertical video assets are available, because horizontal video served in Shorts format produces poor viewability.
• Limit to YouTube + Discover for brand awareness campaigns where Gmail’s lower-attention environment is less relevant to the awareness objective.

YouTube Shorts

Google’s February 2026 guidance specifically calls out vertical images and video for YouTube Shorts.^[2] Shorts placements require 9:16 vertical assets; the June 2026 video aspect-ratio transformation tool now automatically generates 9:16 from existing 16:9 or 1:1 assets, but the output should be reviewed manually — automated cropping of wide-format videos can cut important visual elements.^[4]

9. Measurement and View-Through Attribution

Measurement is the area where Demand Gen is most frequently misunderstood. Because the campaign reaches users across multiple surfaces in a visual, non-search context, many conversions occur after an ad impression rather than after a click. This produces view-through conversions — a signal that requires careful interpretation, not uncritical acceptance.^[4][11]

View-through conversions

Google Ads records a view-through conversion when a user sees (but does not click) a Demand Gen ad and then converts within the view-through attribution window. The default view-through window is one day.^[66] View-through conversions are not the same as incremental conversions — some portion of those users would have converted anyway through other channels. Treating view-through counts as equivalent to click-through conversions in CPA calculations will systematically overstate Demand Gen’s contribution.^[4][11]

Incrementality measurement

The correct approach to measuring Demand Gen’s true value is incrementality testing. Google provides three native incrementality tools:^[4]

• Conversion Lift Study: Compares conversion rates between an exposed group and a holdout group that did not see Demand Gen ads. Provides the cleanest read on incremental conversions.
• Brand Lift Study: Surveys exposed and non-exposed users on brand awareness, consideration, and purchase intent. Appropriate for upper-funnel campaigns where conversion is not the immediate objective.
• Geo lift testing: Compares matched geographic regions with and without Demand Gen spend over a defined test period. Useful when the campaign is too small for a statistically significant in-platform lift study.

Reporting columns and social parity

Google added new reporting columns that include view-through conversions to make Demand Gen reporting comparable to paid social (Meta, TikTok) reporting conventions.^[1] The June 2026 Drop also introduced Web to App Acquisition Measurement for app-install attribution, which connects Demand Gen impressions to downstream app installs across surfaces.^[4]

10. Demand Gen vs Performance Max vs Video Campaigns

Senior marketers frequently ask how Demand Gen relates to Performance Max (PMax) and standalone Video campaigns. The three campaign types are not interchangeable — each serves a distinct strategic function and operates with different levels of advertiser control.^[5]

Structural comparison

Attribute	Demand Gen	Performance Max	Video campaigns
Primary funnel stage	Upper to mid funnel; awareness and consideration	Full funnel; conversion maximisation	Upper funnel; awareness and reach
Placement control	Channel controls across YouTube, Discover, Gmail, GDN	Minimal; Google allocates across all inventory	YouTube only; format-level control
Audience control	High; Lookalike, Custom, remarketing, NCA goal	Low; audience signals only, not targeting	High; full YouTube audience options
Creative control	High; asset-group structure with per-format assets	Medium; asset groups but Google assembles final ads	High; specific video formats selected by advertiser
Bid strategies available	Max Clicks, Max Conversions, tCPA, tROAS	Max Conversions, Max Conversion Value, tCPA, tROAS	CPV, CPM, Max Conversions, tCPA
Avg CPC benchmark (USD)	$0.30–$1.50[59]	Blended; closer to Search at $2.96 for search inventory[73]	$0.18 avg YouTube/Video[73]
Avg CTR benchmark	0.5%–2.0%[59]	Varies by inventory mix; Search component at 3.52%[73]	0.65% avg YouTube/Video[73]
Incrementality measurement	Conversion Lift, Brand Lift, geo tests	Conversion Lift; limited placement-level visibility	Brand Lift, Reach and Frequency reporting

When to run each campaign type

The most effective accounts in 2026 run Demand Gen and Performance Max in parallel, not as substitutes. Demand Gen handles the prospecting and consideration layers — building audiences and warming interest — while PMax handles conversion harvesting across all inventory. Standalone Video campaigns are appropriate when the objective is pure brand awareness at scale with CPM or CPV bidding, and creative control at the video-format level is required.^[5]

11. Common Mistakes to Avoid

The following mistakes are the most frequently documented in 2026 practitioner resources and Google’s own guidance. Each is specific and actionable — the goal is not a generic caution but an identifiable failure mode you can audit for in any active Demand Gen account.^[30]

1. Setting tCPA before 50 conversions

Switching to tCPA with fewer than 50 conversions forces Smart Bidding to operate without enough data. The result is typically erratic CPAs — either severe under-delivery (the algorithm bids too conservatively) or CPA spikes (it bids aggressively to force volume). Always begin with Maximise Conversions and monitor for the 50-conversion threshold before switching.^[5]

2. Running a single creative angle

Uploading one hero image and one video across all ad groups eliminates the AI’s ability to optimise. Google explicitly states that creative diversity is required for full optimisation capability.^[9] A campaign with three images in one aspect ratio and one video will produce a lower Ad Strength score and lose auction eligibility for format-specific placements like Shorts.

3. Seeding Lookalikes with all-site-visitor lists

A Lookalike built from all site visitors will include high-bounce, zero-intent traffic that dilutes the model. Seed only from converters or high-value engagement cohorts.^[4][11]

4. Mixing audience strategies in a single ad group

Combining a cold Lookalike and a warm remarketing audience in the same ad group makes it impossible to read which audience is driving performance or apply different creative angles. Separate every distinct audience strategy into its own ad group.^[8]

5. Treating view-through conversions as equivalent to click-through conversions

Raw view-through counts significantly overstate Demand Gen’s contribution in most accounts. The default view-through window is one day,^[66] but many of those conversions are attributable to other channels. Always run an incrementality test before reporting view-through numbers to stakeholders.^[4]

6. Running below the 10× CPA daily budget floor on tCPA

A tCPA campaign running at 3× or 4× the daily CPA target will under-deliver consistently. This is not an optimisation problem — it is a budget constraint. Resolve it by increasing budget, reducing the tCPA target, or reverting to Maximise Conversions until budget increases are approved.^[7]

7. Ignoring placement-level creative requirements

Serving horizontal 16:9 video in YouTube Shorts, or text-heavy display banners in the Discover feed, consistently underperforms. Use channel controls to exclude placements where you do not have format-appropriate assets, rather than serving mismatched creative to all surfaces.^[1][7]

8. Not excluding existing customers from prospecting campaigns

Without an explicit Customer Match exclusion list, Demand Gen will serve prospecting creative to people who have already purchased. This wastes prospecting budget and inflates the apparent conversion rate of the campaign with easy re-converts.^[1][4]

12. What Changed Recently: June–August 2026

Google has maintained a monthly “Demand Gen Drop” release cadence through 2026. The most recent confirmed updates, from the June 2026 Drop, introduced three significant changes.^[4] Earlier 2026 updates that remain part of the current product are also noted for completeness.

June 2026 Drop — confirmed new features

• Broader video aspect-ratio transformations: Demand Gen now supports automated conversion of video assets across vertical → square, vertical → landscape, and square → landscape ratios. This reduces the production cost of covering all placement formats and is particularly useful for accounts with limited video production budgets.^[4]
• Gemini-powered creative insights: A new in-platform tool that analyses image and video assets and recommends specific optimisations for YouTube placements within Demand Gen. Recommendations include pacing, branding timing, CTA visibility, and aspect-ratio suitability.^[4]
• Web to App Acquisition Measurement: Advertisers with app presence can now attribute Demand Gen exposure to downstream app installs, providing cross-surface conversion visibility that was previously unavailable for app-install journeys originating from Demand Gen impressions.^[4]

Earlier 2026 updates still in effect

• Channel controls across all surfaces (February 2026): Advertisers can now specify which of YouTube, Discover, Gmail, and the Google Display Network their Demand Gen campaign serves on. This replaced the previous all-or-nothing placement model and is now a standard setup step.^[1]
• 9:16 vertical image ads on YouTube Shorts (February 2026): Vertical image assets are now eligible to serve as Shorts ads within Demand Gen, not just vertical video — significantly broadening Shorts eligibility for accounts without vertical video production.^[1][2]
• Video enhancements and Veo-based video variations (March 2026): Google’s Veo AI model can generate additional versions of an original video asset, creating format or pacing variations without requiring additional production. Asset Uplift A/B Experiments were also introduced to test AI-generated asset variations against originals in a controlled environment.^[51]
• View-through conversion reporting columns (February 2026): New reporting columns that include view-through conversions were added to Demand Gen campaign reporting to bring it into parity with paid social reporting conventions — useful for cross-channel comparison but requiring the incrementality caution described in Section 9.^[1]

Strategic implication of the June 2026 direction

Reading across the recent update cadence, Google is clearly investing in three directions simultaneously: more advertiser control over where ads serve (channel controls, format-level controls), more AI assistance for creative production (Gemini insights, Veo variations, aspect-ratio transformations), and better cross-channel measurement (Web to App, view-through columns, lift studies).^[1][4] Accounts that adapt their workflows to use these tools — particularly Gemini creative insights and asset-ratio transformation — will reduce production cost while maintaining the creative diversity that the AI requires to optimise effectively.

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