New ad formats are always welcome here at SOMO. The most recent addition to the mix is a new type of campaign offered by Google, called Demand Gen. Announced in June, it was launched globally on October 15 and has been available to all advertisers since then. It will replace the old Discovery campaigns, but the migration will only be mandatory from January 2024, when they will automatically be converted into Demand Gen campaigns – similar to the migration from Smart Shopping campaigns to Performance Max that happened in 2023.
But what exactly is Demand Gen, and how does it stand apart?
The goal of Demand Gen campaigns, short for Demand Generation, is to do exactly what the name suggests: create demand for products and services. This approach targets potential customers early in their buying journey, aiming to generate interest before they even start searching for products or services.
This is important because campaigns like Search and Shopping don’t generate demand; they only capture existing demand, so they play an essential role in the final stages of the sales funnel. Other campaigns, like Display and Video, can help to raise awareness and create consideration, but we must recognise that there was a significant gap in Google’s advertising offerings that is usually filled with other types of campaigns, such as paid social ads.
Search and Shopping don’t generate demand; they only capture existing demand
Now, with Demand Gen, it’s possible to take advantage of Google’s channels, especially YouTube, to promote products and services, competing directly with Meta and TikTok Ads.
Why we’re excited
One of the key advantages of Demand Gen is its ability to create lookalike audiences – a feature that we have long desired on Google Ads. This allows for creating targeting audiences based on a list of customers or website visitors, for example, similar to the functionality that already exists in Meta. Additionally, Demand Gen supports A/B testing with creative experiments.
Another major advantage is the possibility of using YouTube Shorts as ads. Although the platform has lower engagement rates compared to TikTok and Reels, it has been growing and has already surpassed the mark of 50 billion daily views.
You can also connect a Merchant Center catalog and display products alongside ad creatives, similar to how Collection Ads work on Meta.
Google says that “Demand Gen achieved 3X higher click-through rates, at a 61% lower cost per action” when compared to paid social campaigns. It’s impressive, but we’ll take that with a grain of salt.
Our concerns
However, not everything is perfect. Similar to Performance Max campaigns, Demand Gen lacks detailed insights, making it challenging to understand exactly where conversions are coming from. It’s not possible to know, for example, how much Google is spending on each channel, which takes some control out of advertisers’ hands.
Menachem Ani, from the Search Engine Land blog, shared his experiences with Demand Gen in three accounts with distinct characteristics, and the results were mixed.
A personal perspective
In my opinion, Demand Gen fills an important gap at the top of the funnel (TOF) on Google Ads, positioning itself as a strong competitor against the likes of TikTok and Facebook Ads. However, it can be expensive, and potentially unsuitable for smaller accounts with low budgets.
Also, some marketers have noted that Google may inflate the results attributed to the campaigns, as the platform takes credit for viewthrough conversions. In other words, some conversions that would happen anyway, perhaps organically, might be incorrectly attributed to Demand Gen.
Despite this, I am very excited about the lookalike audiences feature, and I like the fact that the campaign structure is very similar to the setup of Meta campaigns, being able to have several ad groups within the same campaign, and different ads within the same ad group. I also like the fact that you can breakdown performance by video type, so you can know which type of video generates more results and focus more efforts on creating ads of that type.
Best practices and recommendations
When venturing into Demand Gen, there are a few best practices to keep in mind. According to Google, the Target CPA should be set at twice your standard campaign performance. Also, the daily budget should be either 15 times your Target CPA or 20 times your average conversion value divided by your Target ROAS. This is expected, as it costs more to convert a user in the early stages of the funnel than to convert a user who is already in the consideration phase.
For the creative aspect, it’s important to follow Google’s guidelines, which can change according to the placement. Like other types of campaigns, the ads are responsive, which means you will provide various assets to Google, and let the machine create different combinations until it finds the best one for each type of user. In summary, you will need the following:
- Images in formats 1.91:1 (landscape), 1:1 (square), and 4:5 (portrait)
- Videos in formats 1:91:1 (landscape), 1:1 (square), and 4:5 (portrait)
- Headlines (up to 40 characters)
- Descriptions (up to 90 characters)
Lastly, a pro tip – always keep an eye on conversion paths in Google Ads. This will give you a better understanding of how Demand Gen is influencing your customer’s journey. There you can see all the touchpoints that users interacted with until the moment of conversion, as long as they are within Google’s advertising network. This way, it’s possible to identify if a click coming from a Demand Gen campaign assisted in a conversion, even if it wasn’t the last click.
If you need help setting up your next Google Demand Gen campaign, you can get in touch with us here.
