Scaling Ecommerce Brands with Google Demand Gen and AI

Reaching and converting customers has become both an art and a science. Traditional approaches like waiting for potential buyers to search for your brand simply aren’t enough. To scale effectively, consumer brands must proactively engage consumers with compelling visuals precisely at moments of inspiration and discovery.

As competition for attention intensifies, mastering proactive audience targeting and harnessing AI-powered visual campaigns has become not just beneficial but essential.

Enter Google Demand Gen, a cutting-edge campaign type strategically designed to drive consumer brand growth through proactive, visually-driven customer engagement. 

Rather than passively waiting for a search, Demand Gen campaigns actively identify, capture, and nurture new customer interest, positioning brands at key moments across visually immersive Google surfaces such as YouTube, YouTube Shorts, Discover, Gmail, and now also across the broader Google Display Network. 

Leveraging sophisticated machine learning and visually compelling creatives (images, videos, and interactive carousel ads), Demand Gen proactively finds and engages new customers, creating meaningful brand experiences exactly where audiences spend their time.

This article will provide a clear, practical blueprint for leveraging Google Demand Gen campaigns to scale effectively. You’ll gain strategic clarity around how Demand Gen uniquely positions your brand in front of high-intent audiences, how to expertly navigate campaign setup and targeting, and how to optimize performance using powerful AI-driven insights.

Understanding Demand Gen vs. Other Google Ads Campaign Types

Consumers are spending more time than ever browsing visual-first platforms like YouTube, Shorts, Discover, and Gmail, seeking ideas, inspiration, and products before they’re ready to search explicitly. Consumer brands that aren’t actively engaging these audiences risk missing critical early-stage interactions, leaving the door open for competitors to establish relationships first.

According to Google’s own research, YouTube ads generate 2.3x higher long-term Return-on-Ad-Spend (ROAS) compared to traditional paid social platforms. Additionally, brands using Google Demand Gen campaigns have seen significant performance lifts, with an average of 58% higher ROAS compared to traditional Video Action Campaigns.

Despite their powerful benefits, Demand Gen campaigns are sometimes mistakenly equated with Performance Max campaigns. With Google’s phase-out of Discovery campaigns (now fully integrated into Demand Gen), it’s especially important to clarify the unique roles and capabilities between Demand Gen and Performance Max.

Demand Gen Campaign

Demand Gen excels at proactively driving new customer acquisition and brand consideration earlier in the buyer’s journey.

It leverages highly visual placements (YouTube, Shorts, Discover, Gmail, Google Display Network), advanced creative formats such as carousel ads, deep integration with ecommerce product feeds, precise AI-driven audience targeting, robust lookalike audience capabilities, and the ability to exclude (negate) specific audience segments. 

This control enables ecommerce brands to accurately define who they do and do not want to reach, thus maximizing audience relevance and campaign efficiency.

Performance Max Campaigns (PMax)

Performance Max serves as Google’s comprehensive, full-funnel campaign solution designed primarily for bottom-of-funnel, conversion-oriented results. 

PMax dynamically optimizes across Google’s entire inventory, including Search, Shopping, YouTube, Display, Gmail, and Maps, to capture demand efficiently from users who are already primed to convert. 

However, unlike Demand Gen, Performance Max does not currently support direct targeting of lookalike audiences or the ability to explicitly exclude specific audience segments.

By clearly understanding these distinctions, brands can better leverage both campaign types strategically. Demand Gen proactively builds a high-quality pipeline of engaged prospects, effectively complementing Performance Max’s strength in converting these prospects into paying customers.

Strategic Setup of Google Demand Gen Campaigns

The Central Role of AI in Demand Gen Campaigns

At every step, AI’s sophisticated algorithms ensure your ads are reaching the right customers, in the right places, at the right moments, maximizing engagement and driving tangible business outcomes.

Lookalike Audience Expansion

AI excels at analyzing your first-party customer data, including email lists, website visitors, past converters, and YouTube channel viewers. Using machine learning, it identifies distinct behavioral patterns, interests, and demographics within these audiences. 

Then, it proactively finds new customers across Google’s vast network who exhibit similar traits, significantly expanding your brand’s reach to highly relevant, previously untapped user segments.

Creative Optimization and Rotation

AI dynamically pairs and rotates your available assets to discover and showcase the most effective combinations. 

By continuously testing and adjusting creative combinations in real-time, AI ensures that each user sees the most relevant and visually appealing message, tailored specifically to their individual preferences and contexts.

Automated Bidding Strategies (tCPA and tROAS)

Demand Gen leverages Google’s robust Smart Bidding strategies such as Target Cost-Per-Acquisition (tCPA) and Target Return-On-Ad-Spend (tROAS). 

AI analyzes historical performance data alongside contextual signals like device type, geographic location, and time of day, as well as real-time auction factors. Using these insights, the AI automatically optimizes your bids for each impression, ensuring maximum efficiency and return on investment.

Dynamic Budget Allocation

While advertisers set overall campaign budgets, AI algorithms optimize the precise allocation of this budget across different audience segments, placements, and creative asset combinations. 

Budgets dynamically shift toward the elements delivering the best real-time performance, minimizing wasted spend and continually improving campaign efficiency.

In essence, Google’s AI functions as a continuously learning optimization engine, proactively identifying opportunities, predicting user preferences, and creating optimal combinations of your visual and textual assets. 

Essential Creative Assets for Ecommerce Demand Gen Campaigns

In visually-rich campaign types like Google Demand Gen, the quality and variety of your creative assets directly influence your success. 

High-quality visuals not only grab consumer attention but also shape first impressions, build trust, and ultimately inspire action. Given how consumers rapidly scroll through feeds and discover content visually, investing in standout creative assets is essential.

To launch a successful Demand Gen campaign, ensure your creative toolkit includes these key assets:

1. High-Resolution Images

Your images should clearly communicate the unique value and appeal of your products. Include a mix of formats such as:

• Landscape (16:9): Great for placements like YouTube In-Feed ads or Google Discover, capturing attention as users scroll.
• Square (1:1): Ideal for flexibility across multiple placements, including Gmail and certain Discover experiences.
• Vertical (9:16): Essential for immersive full-screen experiences, particularly on platforms like YouTube Shorts.
• Portrait (4:5): Provides optimal coverage and engagement across certain placements in feeds, allowing for a slightly taller visual experience than square images.

Prioritize lifestyle images that show your products being used authentically, along with sharp, detailed product-focused shots. Consistent, visually appealing branding enhances recognition and recall.

2. Short-Form and Vertical Videos

Video has emerged as a dominant format, especially for consumer brands showcasing product benefits, features, or lifestyles. Effective videos include:

• Short-form Videos (6–15 seconds): Ideal for capturing attention quickly, clearly demonstrating product value, or sparking curiosity.
• Vertical Format (9:16): Especially powerful on mobile-first platforms like YouTube Shorts, where viewers expect immersive, full-screen experiences.

Focus on concise storytelling, clear visuals, and engaging, on-brand content that fits naturally within users’ scrolling behaviors.

3. Carousel Ads (Up to 10 Cards)

Carousel ads enable marketers to showcase multiple products, promotions, or messaging variations within a single ad unit, providing insights into what resonates most with specific audience segments. 

Each carousel card can feature a distinct image or video, individual headlines, descriptions, and unique links, ideal for highlighting various products, features, or offers.

Testing diverse visuals and messaging via carousels provides valuable insights into audience preferences, informing ongoing optimization and creative iteration.

Compelling, visually rich creatives fuel successful campaigns, significantly increasing audience engagement, brand consideration, and ultimately sales performance.

Effective Audience Targeting & Lookalike Strategy

Effective targeting is the backbone of any successful Google Demand Gen campaign. The goal is not simply to reach more users, but to find and engage those users who genuinely align with your existing customer base and show high potential for conversion. 

The key is strategically combining clear initial signals grounded in your own first-party data with Google’s powerful AI-driven lookalike audience capabilities.

When building audience segments for Demand Gen, the first step is providing precise initial signals to guide the AI. These signals typically include:

• Customer Match Lists: Upload email lists of your existing customers or newsletter subscribers directly into Google Ads. This allows Google’s AI to understand the profiles of your most valuable customers.
• Website Visitors: Clearly define audience segments based on user interactions, such as product views, cart abandoners, or visitors to high-value pages.
• Custom Segments: Leverage custom intent segments defined by relevant keywords, competitor URLs, or user interests that align closely with your product offerings.

Once you’ve established clear initial audience signals, the AI then takes over to significantly extend your reach through powerful lookalike audience expansions.

Demand Gen campaigns offer clear and flexible audience expansion settings (such as 2.5%, 5%, or 10%), giving advertisers the control to incrementally widen their audience pool and test different scales of expansion.

Performance Monitoring and Structured Scaling for Google Demand Gen

Continuous optimization and strategic scaling go hand-in-hand. To scale your Google Demand Gen campaigns effectively and sustainably, you must have a clear understanding of how to consistently measure performance, identify opportunities, and make informed, incremental adjustments.

Step 1: Establish Clear Performance Benchmarks

Before scaling your campaigns, it’s essential to verify that you’re consistently achieving your established performance targets. Evaluate these core metrics over a meaningful timeframe (typically several weeks) to confirm campaign health and readiness for expansion:

• Cost Per Click (CPC) and Cost Per Mille (CPM): These efficiency metrics help gauge overall campaign effectiveness. Sudden fluctuations can highlight changes in competitive dynamics, audience engagement, or creative resonance.
• Conversion Rate and Cost Per Lead (CPL): Tracking these metrics reveals immediate insights into your campaign’s effectiveness at converting audience interest into tangible actions. Declining conversion rates or rising CPL may indicate the need for adjustments to creatives or landing pages.
• Customer Acquisition Cost (CAC) and Return On Ad Spend (ROAS): These metrics inform your campaign’s long-term profitability and viability. Regularly analyzing CAC and ROAS ensures your growth trajectory aligns with profitability goals.

By combining short-term metrics (CPC, CPM, conversion rate) with longer-term profitability indicators (CAC, ROAS), you can confidently determine when your campaigns are ready to scale.

Step 2: Gradually Increase Budgets with Continuous Monitoring

Once you’ve validated consistent campaign performance, begin incrementally increasing your Demand Gen budgets by roughly 10–20% increments. This gradual approach allows Google’s AI algorithms adequate runway to adapt to the new spend levels and optimize effectively. 

After each incremental increase, closely monitor your established performance metrics (CPC, CPM, conversion rate, CAC, ROAS). This vigilant monitoring will help quickly identify and address potential issues or diminishing returns, ensuring efficient budget allocation.

Step 3: Strategically Expand Reach with Proven Channels and Audience Segments

When incremental budget increases yield sustained positive results, leverage your highest-performing audience segments and proven creatives for strategic expansion. Consider widening your lookalike audience segments (for instance, expanding from 2.5% to 5% or even 10%), exploring additional relevant in-market or affinity audiences, and introducing complementary product visuals or messaging variations already proven effective. 

Methodically scaling based on data-backed successes, rather than assumptions or broad experimentation, helps mitigate risk and sustains ongoing campaign effectiveness.

This structured approach, combining diligent performance monitoring with incremental, data-informed scaling, ensures that consumer brands can effectively expand Demand Gen campaigns, optimizing AI-powered results while safeguarding long-term profitability and efficiency.

Integrating Demand Gen into a Full-Funnel Ecommerce Strategy

Google Demand Gen campaigns are designed as a powerful mid-funnel tactic to introduce your brand to new prospects, engage their interest, and nurture them toward purchase. As campaigns mature and Google’s AI optimizes targeting and creative combinations, Demand Gen also increasingly drives direct conversions, bridging awareness and final purchase seamlessly.

For optimal results, integrate Demand Gen strategically alongside complementary lower-funnel campaign types such as Search and Performance Max.

Search campaigns capture users actively looking for your products, while Performance Max efficiently leverages machine learning across Google’s ecosystem to convert users closer to purchase. 

Demand Gen complements these lower-funnel strategies by proactively engaging consumers in their discovery and consideration phases, ensuring a steady pipeline of qualified prospects.

Demand Gen excels by combining visually compelling storytelling, rich imagery, engaging videos, and interactive carousels with sophisticated, AI-driven audience segmentation. 

By clearly positioning Demand Gen at the heart of your mid-funnel ecommerce strategy, you systematically guide prospects through carefully crafted visual experiences toward eventual conversion, maximizing your overall marketing ROI.

Common Pitfalls & Practical Advice for First-Time Users

When getting started with Google Demand Gen, it’s important to approach campaigns with realistic expectations and strategic patience. 

Common Pitfalls to Avoid:

• Treating Demand Gen as purely bottom-funnel:
  • Unlike purely bottom-funnel advertising tactics, Demand Gen thrives through sustained audience nurturing, proactive targeting, and visual-first engagement. Brands often overlook this fundamental difference, leading to misaligned expectations and missed opportunities.
  • Overemphasizing immediate, last-click conversions, and neglecting the campaign’s broader impact on brand awareness and customer consideration.
• Underinvesting in creative assets:
  • Neglecting high-quality visuals like videos, images, and carousel ads limits audience engagement and scalability.
  • Lack of rigorous creative testing prevents campaigns from maximizing performance.

Practical Recommendations for Success:

• Prioritize engaging, platform-native creative:
  • Invest in authentic storytelling, dynamic product showcases, lifestyle imagery, and user-generated content (UGC)-style creatives tailored specifically to placements like YouTube Shorts, Discover, and Gmail.
• Set clear, realistic initial goals:
  • Start by optimizing toward brand consideration, audience engagement, and site traffic.
  • Progressively shift campaign objectives toward direct conversion actions as your campaigns mature, guided by data insights.
• Allow sufficient AI learning periods:
  • Give Google’s algorithms at least 1–2 weeks to collect data and optimize effectively.
  • Avoid making drastic campaign changes during this initial learning phase, providing AI the runway it needs to deliver sustainable results.

Brands that neglect creative quality or underestimate AI learning phases frequently miss out on Demand Gen’s true scaling potential.

The Strategic Potential of Demand Gen for Your Brand

Google Demand Gen offers consumer brands a sophisticated avenue to connect with consumers in the critical moments when inspiration sparks and interest takes hold. As you consider how best to leverage Demand Gen’s visual storytelling and AI-driven targeting capabilities, ask yourself: Are you positioning your brand to be discovered, remembered, and chosen by tomorrow’s customers today? 

Embracing Demand Gen isn’t merely adopting a new campaign type; it’s committing to proactively engaging your audience in meaningful ways that build lasting customer relationships and long-term competitive advantage.

About the Author: Milad Bidgoli is a Senior Media Strategist at adQuadrant. He began his career in the online marketing world after earning his MBA in Marketing from the University of Phoenix. Over the past 10 years, he has thrived in the dynamic field of performance marketing. His experience has allowed him to develop a comprehensive understanding of various performance marketing strategies. He especially enjoy the fast-paced agency environment and the opportunity to help companies achieve holistic growth.