Demand Generation in Google Ads: what it is and how to set up campaigns

In October 2023, Google introduced a new format of advertising campaigns – Demand Generation – based on artificial intelligence and focused on generating demand among cold audiences. Today, in 2025, when the competition for users’ attention in YouTube, Gmail, and Google Discover feeds is growing, effective brand introduction is crucial.

In this article, we’ll take a look at how Demand Generation works, what placements and formats are supported, and go through all the stages of setting up a campaign step by step, sharing best practices and real-world cases to maximize results.

What is Demand Generation?

Demand Generation in Google Ads is a marketing strategy aimed at introducing a brand and generating interest among the audience that is not yet familiar with the products or services of a business owner. The main goal of this approach is to attract cold users (new-to-brand), increase company awareness, and lay the foundation for further conversions in the middle and low levels of the sales funnel. Unlike search campaigns that target users with explicit queries and Performance Max, which focuses on direct conversions, Demand Generation focuses exclusively on the top of the funnel, offering the audience the first contact with the brand through striking visual and video ads.

Key characteristics of Demand Generation

There are three main characteristics.

AI optimization of creatives

Google’s artificial intelligence system automatically adapts uploaded images, videos, and text components of ads to different placements (YouTube, Gmail, Discover). This ensures that each user sees the content in the most effective format, which increases the likelihood of interaction.

Multimedia ads

Demand Generation supports a wide range of formats:

• static images with text overlays to quickly convey the key message (1:1, 4:5, 1.91:1, 9:16 formats)
• carousels for demonstrating several products or storylines in one ad (up to 10 images, each with its own link)
• vertical or horizontal videos up to 30 seconds long for emotional engagement;
• product feeds integrated through the Merchant Center, which allows you to display current offers directly in your ads.

Advanced analytics

In addition to standard click and impression metrics, Demand Generation gives you access to:

• Path to conversion – how users interacted with different formats and placements before performing a targeted action;
• brand lift research – assessment of changes in brand awareness and perception;
• data-driven attribution, which more accurately distributes value between different touchpoints in the user journey.

Thanks to these characteristics, advertisers can not only reach the maximum cold audience but also analyze their behavior in detail, optimizing the strategy at each stage of the funnel.

The difference between Discovery Ads and Demand Generation

Let’s take a look at the difference between the key aspects of Discovery Ads and Demand Generation – from placements and formats to budget recommendations and analytics. This will help businesses choose the optimal format or combine both to achieve maximum reach and efficiency.

As you can see, Demand Generation is a logical development of Discovery Ads with a focus on scale and deeper analytics. So, if you need a quick launch with minimal creative costs, you should choose Discovery. And if your goal is to reach a wide cold audience with detailed reporting and the ability to flexibly manage your budget and impression frequency, you should test Demand Generation on a separate campaign.

Step-by-step guide to setting up a Demand Generation campaign

To get the most out of the Demand Generation format, it is important not only to prepare creatives but also to set up the campaign in Google Ads correctly.

Below is a detailed guide that covers all the key stages of the launch.

STEP 1: Choose a campaign type

In Google Ads, click Create a campaign and select the goal «Create a campaign without a target». Next, select Demand Generation from the list of campaign types. This format currently does not have a separate tab like Performance Max, so it is available only in the classic campaign editor.

STEP 2: Setting budgets and bidding strategy

It is recommended to choose Smart Bidding – for example, Maximum Conversions or Target CPA. The daily budget amount should be at least 15× CPA in search or 50+ USD for accelerated training.

STEP 3. Setting up audiences

Demand Generation uses several levels of targeting:

• interests (Affinity (audiences by interests), Custom Segments (specially created audiences);
• Look-a-like audiences: narrow (2%), balanced (5%), broad (10%);
• custom segments: import from GA4, user lists, remarketing;
• optimized targeting (enabled separately).

It is recommended to create separate ad groups for each type of audience to compare their effectiveness in the future.

STEP 4. Uploading creatives

Demand Generation supports several types of ads at once, as we have already mentioned above. In each ad, you need to specify

• headlines (up to 5 options)
• description (up to 5 options);
• a call to action (you can choose from the drop-down list or leave it automatic.

STEP 5. Selecting placements

Google Ads automatically enables all available platforms: Gmail, Discover, YouTube Home, Shorts, In-stream. In the new version of the interface, you can now disable the Google Display Network or individual placements if they do not meet the campaign goals.

STEP 6. Additional settings

Several parameters are additionally configurable.

• language and geography of impressions: Ukrainian/English and target region are selected by default;
• frequency of impressions: Google does not allow you to strictly limit the frequency, but you can set a target frequency through audience optimization.
• content exclusion: to avoid being shown next to irrelevant or sensitive content.

STEP 7. Setting up conversion tracking

Before launching, make sure that conversion events are set up in Google Ads or imported from GA4, tracking is enabled via Google Tag Manager or gtag.js, the attribution window is set (30 days is recommended), and data-driven attribution is enabled if available.

STEP 8. Launch and training phase

After launching, the system enters the learning period, which lasts on average 7-14 days. During this period, it is not recommended to make changes to audiences, bids, or ad formats, and it is worth monitoring the dynamics of reach and CTR. After the training is complete, the system starts to steadily optimize the campaign for the set goal.

STEP 9. Analyze the results

Demand Generation efficiency is evaluated in several ways:

• Standard indicators (impressions, clicks, conversions);
• Conversion Path – a sequence of interactions before conversion;
• Search Lift / Brand Lift – the impact on search activity and recognition;
• View-through conversions – an action after viewing an ad without clicking.

If branded queries increase in Google Search Console, it can be assumed that the campaign is really helping to increase awareness.

Best practices and tips

Before implementing Demand Generation campaigns, it’s a good idea to consider proven approaches to setting up, testing, and evaluating effectiveness. The table below summarizes the key principles that significantly improve performance.

Let’s analyze each point in more detail.

1. Demand Generation is best realized through accurate, but not too narrow, targeting. Relevant audiences with medium reach (e.g., lookalike 5- 10%, own customer lists, remarketing users) allow the system to collect more data for effective optimization. Enabling optimized targeting also helps to expand the reach without losing quality.
2. Creatives are the foundation of engagement. The best approach is to combine several formats within a single campaign: horizontal images, vertical videos of up to 30 seconds, carousels with products or stories. It is recommended to create 3 to 5 variants of titles and descriptions for each creative block, which allows the algorithm to choose the most effective combinations. It is also important that the visual content is understandable even without sound.
3. To keep the audience’s attention, you should immediately communicate a clear advantage or benefit – a special offer, a demonstration of the product’s value, a specific solution to a problem. This is especially true for B2C segments, while in B2B, it is appropriate to showcase expertise or case studies.
4. Controlling the frequency of impressions is of strategic importance. The system allows you to manage this parameter to some extent through the structure of ad groups, audience, and periodic rotation of creatives – once every 2-3 weeks, depending on the level of engagement and CTR.
5. Evaluating the effectiveness of Demand Generation should go beyond direct conversions. The format is designed to generate primary interest, so indirect indicators are more important: growth in branded traffic, video views, and lift campaigns (Brand, Search, Conversion). Data from Google Ads should be supplemented with information from GA4 or Search Console.
6. The campaign training period is critical. In the first 7-14 days after the launch, it is recommended to avoid any changes in targeting, creatives, or bidding strategy. Any interference resets the algorithm and delays optimization.
7. For an objective assessment, it is worth launching Demand Generation campaigns on a separate budget, without mixing them with Search, Display, or Performance Max. This allows you to get «clean» statistics and make accurate scaling decisions.

Demand Generation cases and results

Trendy Shop , a cosmetics brand

Goal: to reduce CPA and increase traffic without additional investments.

Solution: Google Demand Generation mid-funnel campaign that complemented brand and Performance Max campaigns through YouTube Shorts, In-stream, dynamic product cards.

Results in 3 months:

• CPA dropped by 38%,
• traffic increased by 16%,
• CPC was twice as low as on social media.

As a result, the Demand Generation campaign provided an attractive cost per acquisition, keeping costs stable while scaling the reach.

CSBS (Common Sense Business Solutions), B2B company

Goal: to overcome economic challenges, increase traffic and conversions in the cold audience.

Solution: synergistic approach: Demand Generation + Search + Display campaigns with different creative formats – video and images.

Results (July-December 2024 vs. 2023):

• +59% of impressions,
• clicks +334 %,
• all conversions +1,750% with a budget increase of only +8%,
• CPC decreased by 75%.

In a short period (November 17 – December 16), the results were even better:

• impressions +65 %,
• clicks +380 %,
• conversions +550%,
• costs +13%,
• CPC decreased by 76%.

These figures demonstrate the exceptional effectiveness of Demand Generation in the B2B segment: with minimal additional costs, the campaign brought a significant increase in key metrics.

Future updates and development of the format

In 2025, Demand Generation was finally established as a full-fledged demand generation tool in the Google Ads ecosystem. Thanks to the active implementation of artificial intelligence, integration with other platforms, and improved creative capabilities, the format continues to evolve, providing brands with new ways to reach their target audience.

1. Integration with DV360: a new level of scaling.

Since October 2024, Demand Generation campaigns have been available in Display & Video 360 (DV360), Google’s programmatic advertising tool. As of mid-2025, the integration is actively used by advertisers working with large budgets, complex funnels, and multiple channels simultaneously.

It allows them to

• plan coverage at the level of audiences and frequencies using Forecasting Tools;
• use YouTube, Gmail, Discover, CTV, and Display inventory as part of a single cross-channel campaign;
• apply complex buying rules, segmentation, and experimental algorithms for video and carousel serving;
• integrate Demand Gen into existing DV360 scripts without creating separate campaigns.

For large eCommerce, B2C, and media brands, this means much more control over reach, frequency, brand lift, and cost dynamics.

2. AI optimization: the next stage of development.

In June 2025, Google announced a series of updates that change the way Demand Generation algorithms work. The main directions are:

• deeper personalization based on intent signals: the system has learned to recognize user motivation not only by search actions but also by typical behavior in videos, Gmail, Discover;
• Predictive storytelling adaptation: ads with videos and carousels can now be automatically generated in real-time, taking into account the best combinations of images, slide order, headlines and texts;
• frequency optimization not only at the campaign level, but also at the level of individual creatives, which helps to avoid advertising fatigue without losing coverage.

Thus, the algorithm adapts to the user lifecycle: the content on the first contact is different from what is shown on the second or third interaction. This increases the chances of deeper engagement without oversaturation with advertising.

Demand Generation today is no longer just an experimental tool, but an important component of a marketing strategy, especially at the stage of demand generation. It allows brands to go beyond reactive advertising and become the initiator of interest. The ability to anticipate user needs even before they are realized is what sets this format apart from other Google Ads campaigns.

Vitalyi Kotov

Head of PPC department

Author's page