How to Optimize Google Ads Demand Gen Campaigns

Google Demand Gen ads are AI powered visual ad campaigns. These ads are not like the traditional Search Ads where bid on keywords & intent, they display on platforms like YouTube, YouTube Shorts, Discover, Gmail, Maps, and Google Display Network. Google describes them as a campaign type built to drive engagement and action across these browse/discovery platforms, not just people actively searching on Google Search. (Google Help). Learn how to Optimize Google Ads Deman Gen campaigns for your business to thrive and improve ROI by reading this full article by Momentum Digital. 

Personally, I’ve been using Google Ads for nearly 2 decades, starting out as a business owner in college, back when CPCs were <$1. Here we are 16, years later, and I’ve managed over $20 Million in campaign dollars across thousands of clients. What I’ve noticed is how Google Ads Search Campaigns have become extremely competitive and expensive, so they’re now trying to leverage AI based campaigns and user data across all their Google Platforms, in order to drive more leads for their advertisers, at a similar cost per acquisition. However, it doesnt always seem to work as expected. The CPCs & CPMs are much lower, but the CPA and overall transparency are much worse.

Demand Gen Ads targets audiences, not keywords.

You can target users using:

• Your first party data: Website visitors, customer lists, app users, YouTube viewers, purchasers, cart abandoners, etc.
• Lookalike segments: Demand Gen supports lookalike audiences based on seed lists such as purchasers, site visitors, or YouTube viewers. Google is transitioning lookalikes in 2026 toward more of a “suggestion/signal” model, meaning the seed audience helps guide Google AI rather than acting as a strict audience filter. (Google Help)
  
• Custom segments: These can be based on keywords, URLs, and apps related to your ideal audience. For example, a roofing company could use competitor URLs, “roof replacement cost,” “storm damage roof repair,” “best roofing company,” etc. Google’s FAQ recommends 10–15 search keywords for custom segments when using Max Clicks. (Google Help)
  
• In-market, affinity, life events, and detailed demographics: Google estimates audiences based on interests, intent, demographics, Google activity, and third-party website behavior. (Google Help)
  
• Optimized targeting (AI expansion): This is the big one. Optimized targeting uses your selected audiences or keywords as signals, then Google may go beyond them to find people more likely to convert. Google states that your audience selections are only a starting point. As the campaign learns, it may serve fewer impressions to your original audiences if it finds higher-performing users elsewhere. (Google Help)

You guide the machine, but you do not fully control every impression.

Not every type of company or industry should try or use Demand Gen. So if you never start one of these campaigns you wont really need to learn how to optimize a Google Ads Demand Gen campaign. These campaigns are better suited for driving targeted awareness to clicks, and then remarketed to for conversions.

As a former Googler and CEO of Momentum Digital, I recommend Demand Gen campaigns for businesses that need to reach potential customers before they actively search.

They work especially well for ecommerce brands, home service companies, medical and cosmetic practices, real estate professionals, law firms, fitness and wellness brands, education companies, B2B businesses, franchises, and event-based companies.

List of Industries that can benefit:

• Ecommerce brands – Showcase products visually and drive online sales through YouTube, Gmail, Discover, and Shorts.
• Home service companies (roofers, remodelers, landscapers, painters, etc.) – Stay top-of-mind before customers are actively searching.
• Medical & cosmetic practices – Promote elective services like med spas, dental implants, plastic surgery, and weight loss.
• Real estate agents & home builders – Build awareness and nurture buyers over longer decision cycles.
• Law firms – Great for practice areas where people research before hiring (estate planning, family law, personal injury).
• Fitness, wellness & beauty brands – Drive memberships, appointments, and product sales with engaging visual content.
• Education & online courses – Generate leads from users discovering new learning opportunities.
• B2B companies – Build brand awareness, generate leads, and remarket to decision-makers.
• Franchises & multi-location businesses – Increase local awareness and reach new audiences.
• Event venues, entertainment & hospitality – Promote seasonal offers, events, and bookings.

Demand Gen uses visual ads across YouTube, Shorts, Discover, and Gmail to build awareness, introduce offers, retarget interested audiences, and generate leads or sales. It is most effective for businesses with strong creative assets, clear offers, longer buying cycles, or a need to expand beyond traditional Search campaigns.

1. Start with stronger first-party data

The best targeting seed is usually:

• Past purchasers
• Qualified leads
• High-value customers
• Add-to-cart users
• Checkout abandoners
• Email list / CRM list
• Website visitors from high-intent pages
• YouTube viewers who watched meaningful videos

For ecommerce, use purchaser lists and product viewers. For lead gen, use qualified leads, booked calls, completed forms, and closed customers.

2. Separate prospecting and remarketing

Avoid combining everything into one campaign.

Instead, build separate campaigns:

Campaign 1: Prospecting
Custom segments, lookalikes, in-market audiences, competitor URLs, and interest-based audiences.

Campaign 2: Remarketing
Website visitors, cart abandoners, product viewers, lead form visitors, YouTube engagers, email list, and past customers if relevant.

This makes reporting and budget control much easier.

3. Use better conversion signals

Bad Demand Gen performance often comes from weak conversion goals.

Avoid optimizing only for:

• Page views
• Time on site
• Low-quality form fills
• Button clicks
• Newsletter signups, unless that is truly the goal

Better conversion actions:

• Purchases
• Qualified leads
• Booked appointments
• Quote requests
• Calls over a certain duration
• Add to cart / begin checkout for ecommerce
• Offline imported qualified leads or closed sales

Google recommends conversion-focused bidding like Maximize Conversions or Target CPA when your goal is conversions, because the system relies on conversion data to optimize performance. (Google Help)

4. Build tighter custom segments

For better targeting, build custom segments around actual buyer intent.

Bad custom segment:

• marketing
• business
• services
• home
• laptop

Better custom segment examples:

• “roof replacement cost”
• “emergency roof repair near me”
• “gaming laptop RTX 4080”
• “best laptop for video editing”
• competitor URLs
• product category URLs
• industry blogs/forums/review sites

Think of custom segments as audience intent signals, not exact search keyword targeting.

5. Monitor Demographics and Creative Performance

Demand Gen reporting includes campaign/ad group reporting, top ads, video analytics, conversions, demographics, and other performance views. (Google Help)

Check:

• Age
• Gender
• Household income, where available
• Devices
• Locations
• Top creatives
• Video performance
• Ad group performance
• Audience segment performance
• Conversion quality by campaign

Then remove or separate obvious weak performers.

Demand Gen handles exclusions differently than Search campaigns. And this is important, because you can end of wasting a ton of ad dollars on terrible irrelevant clicks. So here are some key campaign exclusions to be aware of using.

1. Use audience exclusions

Demand Gen allows you to exclude audience segments, including first-party data. (Google Help)

Good exclusions:

• Existing customers, if you only want new customers
• Recent converters
• Employees
• Job seekers
• Unqualified lead lists
• Low-value customer lists
• Support-only visitors
• Careers page visitors
• Current clients
• People who already purchased, unless upselling

For lead gen, I’d almost always exclude:

• Existing customers
• Recent form submissions
• Careers/job seekers
• Low-quality lead lists
• Competitor/internal traffic where possible

2. Use account-level content suitability

For Demand Gen, brand safety and content exclusions are mostly handled at the account-level Content Suitability page. Google says core suitability settings are not available at the campaign level for Demand Gen, and keyword exclusions are available at the account level under Excluded content keywords. (Google Help)

Use this to exclude broad junk themes like:

• jobs
• careers
• free
• DIY
• cheap
• template
• scam
• lawsuit
• complaint
• used
• torrent
• repair manual
• discount only
• training
• course
• student

But remember: these are content exclusions, not Search-style negative keywords.

3. Use placement exclusions carefully

Google allows account-level placement exclusions, but Demand Gen doesn’t offer the same campaign-level placement controls as traditional Display campaigns.

Instead of manually cleaning up placements, you’ll generally manage brand safety through account-level content suitability settings.

4. Exclude bad locations

Tighten geo settings aggressively.

For local lead gen:

• Target exact service areas
• Exclude locations outside service area
• Watch city/location reports
• Avoid overly broad state or national targeting unless the business truly serves it

For national ecommerce:

• Exclude states/regions with poor CPA or low purchase quality
• Separate high-performing regions into their own campaign if volume supports it

5. Exclude irrelevant demographics

If the data clearly shows certain demographics aren’t converting, consider excluding or separating them.

Examples:

• Luxury remodeler: maybe exclude younger age groups if they click but never convert
• B2B SaaS: exclude low-value consumer audiences if irrelevant
• High-ticket ecommerce: review age, device, income, and location trends before cutting

Don’t overdo this too early. Give the campaign enough data first.

I believe every advertiser (industry) should use Google Ads, but in a specific way related to their goals, targeting and budget. For example, search ads might work very well for a local repair company, and display ads may work better for a new product via ecommerce.

So, to Optimize Google Ads Demand Gen campaigns, try this:

• Build separate campaigns for prospecting and remarketing.
• Use strong first-party data: purchasers, qualified leads, high-intent visitors.
• Create tight custom segments using buyer keywords, competitor URLs, product/category URLs, and industry websites.
• Use Maximize Conversions or Target CPA, not Max Clicks, if lead quality matters.
• Exclude recent converters, existing customers, job seekers, bad-fit lists, and low-quality lead lists.
• Add account-level content keyword exclusions for junk traffic themes.
• Review demographics, locations, devices, audiences, and top ads weekly.
• Pause weak creative fast, but give targeting and bidding enough learning time. Google recommends waiting at least two weeks, or 50 conversions for new campaigns, before judging optimized targeting performance. (Google Help)

Demand Gen is not about finding perfect keyword intent. It is about giving Google the best audience signals, conversion signals, creative signals, and exclusion guardrails so the algorithm learns who is actually worth paying for.