Demand Gen is Google’s replacement for Discovery ads, launched in 2023. Google has positioned it as a mid-funnel campaign type that runs on YouTube, Gmail, and Google Discover — surfaces where users are browsing and receptive to new products, not actively searching.
Most ecommerce store owners have seen it mentioned in Google Ads recommendations and have not known whether to act on it. The short answer: Demand Gen is a legitimate addition to a well-funded ecommerce account, but it is not where most stores should start, and it does not do what PMax does.
What Demand Gen Is
Demand Gen is a visual, intent-based campaign that runs specifically on:
- YouTube — in-stream ads, Shorts ads, and in-feed ads within the YouTube app and website
- Google Discover — the interest-based content feed on Android and the Google app
- Gmail — sponsored promotions in the Gmail Promotions and Social tabs
It does not run on Google Search. It does not run on Shopping. It is entirely upper-funnel and mid-funnel, showing your ads to users who are browsing content rather than actively searching for products.
The core difference between Demand Gen and standard Display advertising: Demand Gen uses Google’s intent signals and interest data to target users who are more likely to be receptive to new product discovery. It is designed to create demand rather than capture it — hence the name.
What Changed From Discovery Ads
Discovery ads (retired in 2023) ran on the same surfaces and operated similarly. Demand Gen inherits the core placement set but adds:
Product feeds. Demand Gen can now be connected to your Merchant Center product feed, allowing Google to serve product-level ads showing your catalog items with prices and titles — similar to Shopping ads but in YouTube, Discover, and Gmail placements rather than Search.
More creative formats. Demand Gen supports more video ad formats than Discovery did, including YouTube Shorts ads.
Better audience controls. Demand Gen has improved audience targeting options, including the ability to use Customer Match lists and Similar Segments more effectively than Discovery supported.
Lookalike audiences. Demand Gen has a native audience expansion feature (similar to Facebook’s Lookalike audiences) that builds audiences based on your existing converters and site visitors.
How Demand Gen Differs From PMax
This is the comparison most store owners need to understand before deciding whether to add Demand Gen.
PMax is a full-funnel campaign that runs across all Google inventory including Search, Shopping, Display, YouTube, Gmail, and Discover. Its primary optimization goal is conversions, and it allocates budget across inventory types dynamically.
Demand Gen runs only on YouTube, Discover, and Gmail — no Search, no Shopping. It is optimized for upper and mid-funnel objectives: clicks, landing page views, or conversions (though its conversion optimization is weaker than PMax’s because it does not have Search and Shopping to anchor it).
If you run PMax, your PMax campaign is already bidding for YouTube and Discover inventory as part of its cross-channel allocation. Running a separate Demand Gen campaign on the same audiences means you are potentially competing against your own PMax for the same inventory.
This overlap is worth being deliberate about. The common approach is to use Demand Gen for specific upper-funnel objectives — new audience prospecting, product launches, brand building — where you want dedicated budget and creative control that PMax’s automatic allocation would not guarantee.
When Demand Gen Makes Sense for Ecommerce
You have a visual product with strong creative assets. Demand Gen is a visual format. Products that photograph well, have a strong lifestyle image story, or work well in short video (fashion, home decor, beauty, food) will perform better than commodity products without compelling visuals.
You have enough budget that PMax is already spending its full allocation. If your PMax campaign is hitting its daily budget cap and achieving your target ROAS, there may be incremental audience reach available on YouTube and Discover that a Demand Gen campaign can capture. If PMax is not spending its full budget, adding Demand Gen is premature.
You want to control upper-funnel spend explicitly. PMax allocates budget across Search, Shopping, and upper-funnel placements automatically based on its conversion model. If you want a guaranteed upper-funnel presence — because you are launching a new product line or entering a new market — Demand Gen gives you explicit budget control on those placements that PMax does not.
You have strong creative production capability. Demand Gen rewards creative quality more than most campaign types because it is competing for attention in a browsing context, not an active search context. If you can produce compelling video content and high-quality image sets, Demand Gen is the right vehicle. If your creative is weak, the format will underperform regardless of audience quality.
When Demand Gen Is Not the Right Move
Your PMax is not yet fully optimized. If you are still working on PMax setup, asset quality, brand exclusions, and ROAS targets, adding Demand Gen introduces another variable before the core campaign is stable. Fix PMax first.
Your monthly ad budget is under $3,000-5,000. Demand Gen requires meaningful budget to accumulate enough impression data to optimize. A $300/month allocation produces too few impressions to generate the learning data the campaign needs. Small budgets belong in campaigns closer to conversion intent — Search and Shopping.
You do not have video assets. While Demand Gen can run image-based ads, its best placements are video-first (YouTube in-stream and Shorts). Running Demand Gen without video assets means missing the highest-reach placements the format offers.
Your goal is purely performance ROAS. Demand Gen’s ROAS, measured directly, will almost always look worse than your PMax or Search campaigns. This is because it runs upper and mid-funnel — it influences users earlier in the journey, and those conversions often appear in other campaigns at the point of purchase. Evaluating Demand Gen solely on last-click ROAS misrepresents its role. If you are not prepared to evaluate it on view-through or assisted conversions alongside direct ROAS, the campaign will look like a poor performer and get cut prematurely.
Setting Up a Demand Gen Campaign
Conversion goal: Set Demand Gen to optimize for Conversions or Conversion Value, using your purchase conversion action. This keeps the optimization signal consistent with your other campaigns.
Audience strategy: Use a tiered approach.
Warm audiences first: your Customer Match buyer list, website visitors in the last 90 days, cart abandoners, product page viewers. These users are already familiar with your brand and are the most likely to convert from a mid-funnel ad.
Lookalike expansion: enable Google’s audience expansion based on your warm audiences. This uses Google’s signals to find users who are similar to your converters.
Interest and in-market targeting: add Google’s in-market audiences relevant to your category for prospecting.
Creative approach:
For a product catalog, connect your Merchant Center feed. This allows Demand Gen to serve product carousel ads on Discover and Gmail, similar to Shopping ads but in a browsing context.
For brand-building, use lifestyle imagery and short video that communicates what your brand is, not just what it sells. The Discover and YouTube audience is not in purchase mode — ads that feel like ads get skipped. Ads that feel like content worth watching get engagement.
Budget: Start with 10-15% of your PMax budget as a test allocation. Run for at least 4 weeks before evaluating. Demand Gen needs time to move through the learning phase.
Reporting and Attribution Considerations
Demand Gen conversions in your Google Ads report will include view-through conversions by default — conversions from users who saw (but did not click) a Demand Gen ad and later purchased through another channel. These are credited to Demand Gen using view-through attribution.
This is legitimate but easily misread. If you see Demand Gen reporting 50 conversions but only 8 clicks, view-through attribution is the explanation. Whether to include view-through conversions in your Demand Gen evaluation depends on how much weight you give to upper-funnel influence.
For a conservative measurement approach, exclude view-through conversions from your Demand Gen ROAS calculation and evaluate only click-based conversions. The result will look worse, but it is a more defensible measure of direct impact.
The full picture requires looking at assisted conversion data in GA4 or through a multi-touch attribution view — how often does a Demand Gen touchpoint appear in the conversion path, even when the last click is a different channel?
That analysis will give you a more accurate picture of whether Demand Gen is contributing to overall revenue, which is the question worth answering before deciding to scale or cut it.
Related Posts
How Remarketing Lists Work in Google Ads — and Why Most Ecommerce Stores Set Them Up Wrong
Google Ads for International Ecommerce: Multi-Country Campaigns, Currency, and Feed Setup
Google Ads for Stores With a Small Product Catalog: What Actually Works
Need Help With Your Google Ads?
I help e-commerce brands scale profitably with data-driven PPC strategies.
Get In Touch