How to Set Up a High-Performing Google Demand Gen Campaign in 2025

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If you’re launching Demand Gen campaigns on Google Ads in 2025, Google will try to nudge you to “just turn them on.” But if you don’t nail the setup, you’ll burn through your ad budget fast — with little to no ROI.

In this tutorial, you’ll discover:

The correct way to set up Demand Gen campaigns in Google Ads
The best campaign structure for data clarity and control
The new 2025 updates (including Shorts-only and Display-only formats)
The settings you must change before going live

Let’s break it down so you can start running profitable campaigns with confidence.

What Is a Google Demand Gen Campaign?

A Google Demand Gen campaign is designed for top-of-funnel awareness. These campaigns don’t wait for search intent — they proactively show your creative to potential customers across platforms where they already spend time.

Your Demand Gen ads can appear on:

YouTube (including YouTube Shorts and in-stream ads)
Gmail Promotions tab
Google Discover feed
Google Display Network (GDN)

Unlike search ads, Demand Gen is interruption-based advertising — making it ideal for brands looking to grow awareness, expand reach, and drive cold traffic to high-converting funnels.

👉New Performance Max & Demand Gen Updates You Can’t Ignore

Targeting in Google Demand Gen: How It Works

Even though you’re not targeting keywords, you can still control who sees your ads using first-party data and custom audience signals. Here are your top targeting options:

Upload your customer lists
Build custom segments from search terms
Target YouTube viewers of specific channels or videos
Layer in interests and affinities relevant to your offer
Create lookalike audiences based on existing data

The stronger your audience signals, the better your results — especially during the algorithm learning phase.

Best Demand Gen Campaign Structure (Backed by $100M+ in Spend)

Here’s the ideal campaign structure for Google Demand Gen campaigns in 2025:

Step 1: Start With a Single Campaign

Running one consolidated campaign helps Google learn faster, lets you optimize efficiently, and simplifies data analysis.

Step 2: Use Multiple Ad Groups by Network

Break your campaign into separate ad groups based on placement:

YouTube Shorts
YouTube In-Stream
Display Placements

This approach gives you granular insights into which network is driving conversions — so you can shift budget or refine creative accordingly.

The 2 Most Important Google Ads Settings to Change

Before launching, double-check these two critical settings to avoid wasting money.

1. Turn Off Optimized Targeting

Optimized Targeting allows Google to expand beyond your selected audience — but unless your account has a huge data history, this setting often dilutes your targeting and wastes ad spend.

Leaving it on turns your audience inputs into suggestions, not instructions. This setting behaves similarly to Performance Max campaigns — which means Google takes control over who sees your ads. Turn it off.

2. Build Layered, High-Intent Audiences

Avoid generic interest targeting. Instead, build layered audiences with:

First-party customer data
Custom intent segments
YouTube viewer behavior
Interest and affinity signals

This gives the algorithm smarter signals and helps you reach people who are actually likely to convert.

What Creative Assets You Need for Demand Gen Ads

Demand Gen campaigns are heavily creative-driven. You’ll need a strong mix of image and video assets.

Creative Requirements:

Videos must be uploaded to YouTube
Images should be sized for Display, Discover, and YouTube placements

Final Thoughts: Make Demand Gen Campaigns Work for You in 2025

Launching a Demand Gen campaign is easy — getting it profitable is not. Success depends on:

Smart campaign structure
Correct audience targeting
Consistent creative testing
Regular optimization

Pro tip: Like all campaigns in Google Ads, Demand Gen requires ongoing refinement. Set it and forget it? That’s how you burn money, not build pipelines.