Google Ads has undergone a massive transformation over the last several years, shifting from a platform primarily defined by keyword intent to one that embraces the power of visual storytelling and machine learning. At the forefront of this evolution is Demand Gen, a campaign type designed to bridge the gap between traditional search advertising and the high-impact visual nature of social media platforms.
For B2B organizations and ecommerce brands, the transition to Demand Gen often feels counterintuitive. Traditional search strategies rely on users telling the platform exactly what they want through a search query. Demand Gen, however, functions on the principle of interruption. It places your brand in front of potential customers while they are engaged with content on YouTube, Gmail, and the Google Discovery feed. To make this work, marketers must abandon the search-first mindset and adopt the strategies of a social advertiser.
At the recent SMX Next conference, Jack Hepp, owner of Industrious Marketing, provided a deep dive into the nuances of Demand Gen. He highlighted why many businesses—particularly those in the B2B and lead generation sectors—fail when they first launch these campaigns. By understanding the underlying mechanics of Demand Gen and aligning creative strategy with the customer journey, businesses can unlock a powerful engine for growth that complements their existing search efforts.
Understanding the Shift: From Intent to Interruption
The fundamental difference between Google Search and Demand Gen lies in the user’s mindset. In Search, the user has “high intent.” They are actively looking for a solution, a product, or information. In this scenario, the text ad serves as the answer to a question.
Demand Gen is different. It is an “interruption-based” format. Your target audience isn’t looking for you; they are watching a video on YouTube, checking their inbox, or browsing their personalized news feed. In this environment, visual creative becomes the new keyword. You are no longer bidding on what a person says; you are bidding on who that person is and what visuals will stop them in their tracks.
This shift requires a complete re-evaluation of how campaigns are built. If you treat Demand Gen like a standard Display campaign or a Search campaign without keywords, you will likely see poor engagement and wasted spend. Success in Demand Gen is predicated on your ability to capture attention within the first few seconds of an encounter.
Common Misalignments in Demand Gen Strategy
Many digital marketers approach Demand Gen with baggage from other campaign types. Jack Hepp identified four critical mistakes that often lead to failure:
Expecting Bottom-of-Funnel CPAs from Mid-Funnel Traffic
Because Demand Gen reaches people earlier in their journey, the Cost Per Acquisition (CPA) for a direct sale or a “Request a Demo” CTA will naturally be higher than it is on Search. Expecting the same efficiency from a cold audience as you get from someone searching for your brand name is a recipe for perceived failure.
Using “Spray and Pray” Targeting
While Google’s AI is powerful, it still needs a focused starting point. Targeting “everyone interested in technology” is too broad for the algorithm to find meaningful patterns quickly. Without specific guardrails, the campaign will spend heavily on low-quality impressions that never convert.
Running Bland, Generic Creative
In a visual feed, stock photos and corporate “blue-background” images are invisible. If your creative looks like an ad, people will treat it like an ad and scroll past. Creative that fails to evoke emotion or address a specific pain point will result in a low click-through rate (CTR), which tells Google your content isn’t relevant.
Ineffective Optimization Without Negative Keywords
Search marketers are used to using negative keyword lists to sculpt their traffic. In Demand Gen, those levers don’t exist in the same way. Marketers who don’t know how to optimize through creative refreshes and audience exclusions often find themselves stuck with stagnating performance.
Campaign Structure: Understanding the Hierarchy
To master Demand Gen, you must understand how Google organizes these campaigns. The structure is divided into two distinct levels, each serving a specific purpose in the machine-learning process.
Campaign-Level Settings
The campaign level is where you set the “rules of engagement.” This includes your bidding strategy (such as Maximize Conversions or Target CPA), your primary conversion goals, and your device targeting. Crucially, the campaign level is where the overall budget is often managed, though it’s the ad group level that dictates where that budget actually goes.
Ad Group-Level Settings
The ad group level is where the “learning” happens. This is where you define your audiences, locations, and specific channel placements. It is vital to note that each ad group learns independently. Insights gained in Ad Group A regarding a specific audience do not automatically transfer to Ad Group B. This allows for precise segmentation. You can test different audience buckets—such as competitors’ website visitors versus your own first-party data—with creative tailored specifically to each group.
Creating Interruption-Based Creative
In the world of Demand Gen, you have approximately three to four seconds to make an impact. This is known as “stopping the scroll.” If your visual and headline don’t resonate instantly, the user is gone.
Your creative should follow a simple but effective framework:
- The Hook: A bold visual or headline that addresses a specific problem.
- The Value: A brief explanation of how your product or service solves that problem.
- The Action: A clear, low-friction call to action (CTA).
Unlike search ads, where you might focus on features, Demand Gen creative should focus on outcomes and pain points. For B2B, this might mean highlighting the cost of inaction or a shocking industry statistic. For ecommerce, it might mean showing the product in a lifestyle context that the viewer aspires to.
Aligning Visuals to the Customer Journey
A major pitfall in Demand Gen is asking for too much too soon. You must match your offer to the “temperature” of the audience. Pushing a high-friction offer, like a 30-minute sales demo, to a cold audience who has never heard of your brand is a strategy built for failure.
Cold Audiences: Education and Awareness
For users who are unfamiliar with your brand, focus on “top-of-funnel” content. This includes free guides, industry reports, diagnostic tools, or quizzes. The goal here is to trade valuable information for an email address or simply to pixel the user for future retargeting.
Warm Audiences: Consideration and Trust
Users who have visited your site or engaged with your previous ads are ready for “mid-funnel” content. This is where case studies, webinars, and product comparison tools shine. You are building the case for why your solution is superior to the competition.
Hot Audiences: Conversion and Action
These are your “bottom-of-funnel” users. They have shown significant intent but haven’t pulled the trigger. Direct purchase offers, limited-time discounts, or “Book a Demo” CTAs are most effective here.
The Power of Problem-Focused Creative
Jack Hepp emphasizes that the most successful Demand Gen campaigns move away from “we are the best” messaging and toward “this is your problem, and we fix it” messaging.
Consider the difference between these two approaches for a cybersecurity firm:
- Generic: “Leading Cybersecurity Solutions for Small Business. Contact Us Today.”
- Problem-Focused: “43% of cyberattacks target small businesses. Is your data actually protected?”
The second option uses a specific data point to create a sense of urgency. It stops the scroll because it triggers a thought process in the viewer: “Wait, am I part of that 43%?” This type of messaging drives much higher engagement rates because it feels relevant to the user’s current reality.
Bidding and Budget Strategies for Success
Demand Gen relies heavily on data density. Because it uses Google’s AI to find converters, the system needs enough “signals” to understand who is likely to take action.
The general rule of thumb for conversion-focused bidding is to aim for at least 50 conversions per month at the campaign level. To achieve this, your daily budget should ideally be 10 to 15 times your target CPA. For example, if your target CPA for a lead is $20, you should be prepared to spend $200 to $300 per day.
If you are optimizing for conversion value (ROAS), the requirements are even higher. The algorithm needs to see not just that people are buying, but which people are buying high-value items. Without this data density, the campaign will struggle to exit the “learning phase,” leading to volatile performance and inconsistent results.
Can Demand Gen Work with Small Budgets?
While the data requirements mentioned above can be intimidating for smaller businesses, Demand Gen is still accessible with strategic planning. The key is to move up the funnel.
If a “Purchase” or “Sales Qualified Lead” (SQL) is too expensive to generate 50 times a month on a limited budget, change your conversion goal to a “Marketing Qualified Lead” (MQL) or a “Micro-Conversion,” such as a newsletter sign-up or a specific page view. By optimizing for a higher-volume, lower-cost action, you provide the AI with the data it needs to learn, even with a smaller daily spend. Once the campaign stabilizes, you can begin to shift the focus back toward lower-funnel goals.
Building the Right Audience
Audience targeting in Demand Gen is a balancing act. You want to avoid the “Goldilocks” problem: audiences that are too broad or too narrow.
If an audience is too broad, Google will show your ads to millions of people who have no interest in your product, wasting your budget. If it’s too narrow, the campaign won’t be able to spend its budget or gather enough data to optimize.
The most effective way to start is with Custom Segments. These allow you to target people based on:
- Specific search terms they have used on Google.
- Specific websites they have visited (including your competitors).
- Apps they have downloaded.
By using search terms as a seed for your Demand Gen audience, you are essentially “buying” search intent and applying it to a visual medium. Once these custom segments prove successful, you can layer in Lookalike segments based on your first-party data (customer lists) to scale your reach.
The Role of Creative in Targeting
In modern Google Ads, creative is a targeting lever. When you run a Demand Gen campaign, Google observes who clicks on your ads and who ignores them. If your creative is highly specific to a certain niche—for example, “IT solutions for healthcare clinics”—the people who click will almost exclusively be in the healthcare sector.
Google’s algorithm takes note of this and begins to show the ad to more people who share the characteristics of those initial clickers. In this way, your creative “self-selects” your audience. This is why having distinct creative for different buyer personas is more effective than one generic ad for everyone.
Strategic Exclusions: Less is More
In traditional Search, negative keywords are a primary tool for efficiency. In Demand Gen, marketers often try to apply this same logic by excluding vast swaths of interests, demographics, and placements. However, over-excluding can be detrimental.
Every exclusion you add reduces the pool of data available to the AI. Instead of broad exclusions, use them surgically. Exclude specific age groups or locations that you know for a fact cannot buy your product. Beyond that, trust the algorithm to find the right users within your broader audience parameters. If the AI sees that a certain demographic isn’t converting, it will naturally stop serving ads to them over time.
Optimization: Where to Focus Your Efforts
Since you cannot rely on negative keywords, you must pull different levers to optimize a Demand Gen campaign. There are three primary areas to focus on:
1. Creative Iteration
Test multiple formats, including single images, carousels, and short-form video. Don’t just change the headline; change the entire “hook” or the visual style. Test User-Generated Content (UGC) styles against polished studio shots to see what resonates more with your specific audience.
2. Offer Testing
If your campaign is underperforming, the problem might not be the ad; it might be the offer. If a “Free Trial” isn’t working, try a “Product Walkthrough” or a “Buyer’s Guide.” Small shifts in the perceived value of your offer can lead to massive changes in conversion rates.
3. Post-Click Experience
Demand Gen traffic is often more “fickle” than Search traffic. If your landing page is slow, confusing, or doesn’t immediately reflect the promise made in the ad, the user will bounce. Ensure your landing pages are mobile-optimized and that the transition from ad to page is seamless. Additionally, integrating your CRM with Google Ads allows you to feed offline conversion data back into the system, helping the AI find higher-quality leads.
Real-World Case Study: B2B Managed IT Services
To illustrate these principles in action, Jack Hepp shared a case study of a telecommunications company looking to expand its managed IT services. By aligning their offer, targeting, and creative, they achieved remarkable results.
The Strategy:
- Offer: Instead of a hard sales pitch, they created an interactive quiz that showed business owners how managed IT could specifically reduce their operational costs.
- Targeting: They used custom segments based on high-intent search terms and the URLs of major competitors in the IT space.
- Creative: The visuals focused on the specific pain point of cybersecurity threats, using the “43% of attacks” statistic to grab attention.
The Results:
The campaign delivered an MQL (Marketing Qualified Lead) for just $10. More importantly, the quality was exceptionally high. The conversion rate stood at 3.8%, and 40% of those quiz takers eventually became SQLs (Sales Qualified Leads). Ultimately, this single Demand Gen campaign led to a 20% increase in total SQLs for the company, proving that mid-funnel visual ads can significantly impact the bottom line.
Key Takeaways for Marketers
As you integrate Demand Gen into your digital marketing mix, keep these three pillars in mind:
Match your creative to your customer. Stop thinking about what you want to sell and start thinking about what your customer is currently struggling with. Use bold, problem-focused visuals to earn their attention in the feed.
Target the right stage of the journey. Don’t expect a stranger to marry you on the first date. Use Demand Gen to introduce your brand with low-friction offers, then use retargeting and Search to close the deal.
Optimize through experimentation. Since you have fewer manual controls in Demand Gen, your job is to be a scientist. Constantly test new hooks, new visuals, and new offers. Let the data from Google’s AI tell you what is working, and be prepared to pivot when performance plateaus.
Demand Gen isn’t just a replacement for Discovery ads; it’s a fundamental shift in how Google helps businesses grow. By embracing the “social mindset” and focusing on high-impact creative, B2B and ecommerce brands can reach audiences they never could have found through Search alone.