Digital marketing moves fast, and Google is once again bringing major change. In 2025, Google announced that Video Action Campaigns (VAC) will be upgraded directly to Demand Gen. This means future ad delivery will rely more on AI-driven smart delivery combined with more engaging multimedia content. So what exactly is Demand Gen? Why should marketers bring it into their strategy early? And how can it be used effectively to improve ad performance? This article explains.
What is Demand Gen, and why does it matter?
Demand Gen is a Google ad type aimed at audiences in the middle and lower stages of the marketing funnel: potential customers who have already shown interest in a product or brand and may go on to convert. Its goal is to increase engagement and conversion rates through richer ad formats and AI technology.
The 2025 change: VAC will be fully upgraded to Demand Gen
Google has officially announced that in 2025 VAC will be fully upgraded to Demand Gen.
We recommend that advertisers get familiar with the change early, so they do not miss potential performance gains, and upgrade early to keep ad machine learning stable.
Key milestones:
- April 2025: new VAC campaigns can no longer be created in Google Ads
- July 2025: VAC campaigns still running will be automatically upgraded to Demand Gen
How does Demand Gen differ from VAC?
Demand Gen offers AI-powered targeting, cross-platform delivery and multimedia formats. The differences are:
|
Demand Gen |
VAC |
|
|
Ad formats |
Video, static images, carousel ads |
Video ads |
|
Inventory |
YouTube, Google Discover, Gmail, Google Display Network (coming soon) |
Mainly YouTube |
|
Audiences |
Almost the same as VAC, with the addition of lookalike segments to find audiences similar to your own. |
Custom segments, customer data, interests, demographics, optimised targeting and so on |
|
Bidding |
Almost the same as VAC, with the addition of Maximise clicks |
Maximise conversions, target CPA, maximise conversion value, target ROAS (available with enough historical conversions), omnichannel bidding and so on |
These features make Demand Gen suitable not only for e-commerce brands but also for B2B, app promotion and even offline business development, offering a more flexible and efficient marketing strategy.
How to use Demand Gen to improve marketing results
How can marketers make effective use of Demand Gen through this change? Whether you want to reach more audiences and broaden market recognition, or move hesitant customers at the start of the buying cycle towards checkout, Demand Gen can help. Here are three highlights to make sure your ad budget delivers maximum value.
(1) AI-optimised campaign mix: Demand Gen plus Power Pairing to lift conversion rates
Demand Gen sits in the middle and lower stages of the funnel. Its role is to inspire consumers and increase their consideration of brands and products. CloudAD therefore recommends that advertisers always combine it with other media tools to build a complete funnel and improve return on ad spend.
- Two approaches together: Google research shows that, compared with using Search ads and/or Performance Max (PMax) alone, adding Demand Gen increases total conversions by 14%.
- Reaching more audiences: use Demand Gen’s exclusive lookalike segments to find audiences similar to the member profiles in your first-party data, then use PMax new customer acquisition bidding to capture high-potential customers.
- Connecting the funnel: if you are wondering how to allocate extra budget, Demand Gen can also be combined with a Power Pairing strategy (PMax plus Search ads) to make your strategy more complete.
(2) AI audience targeting to drive demand
Demand Gen defines audience value by interaction behaviour, effectively separating users at different stages of the customer journey. For example, on YouTube audiences can be grouped by value:
- High-value audiences: users who like and share videos.
- Medium-value audiences: users who subscribe to the channel.
- Low-value audiences: users who have watched but not interacted.
(3) AI-powered bidding strategies to optimise conversions
Demand Gen offers three AI bidding strategies to help marketers optimise for different goals:
- Maximise clicks: maximises website traffic within budget. Suited to brand exposure.
- Conversion-based bidding: optimises engagement and cost per conversion to increase the likelihood of a sale.
- Value-based bidding: automatically adjusts bids based on conversion value to boost sales of high-value products.
With these smart bidding options, marketers can flexibly adjust ad budgets to business needs and maximise return on investment.
Conclusion: start planning for Demand Gen now
If your brand has not yet started testing Demand Gen ads, now is the time. Adapting early to this change will help you get ahead in digital marketing and improve brand influence and sales conversions.
