Demand Gen vs Performance Max: what each is for, and what budget

Demand Gen vs Performance Max comes down to whether you want to create demand or collect existing demand across all Google channels. Both campaign types run on automation and learn from conversions, but they’re built for different jobs. Here’s what each type is for, the data and budget each needs, where measurement can mislead you, and how to decide.

1. Demand Gen vs Performance Max: what each campaign is built for

Performance Max: one goal, every channel

According to Google, Performance Max is a goal-based campaign that gives you access to the entire Google Ads inventory from a single campaign: YouTube, the Display Network, the Search Network, Discover, Gmail and Maps. You provide three things:

• Conversion goals, meaning which conversion actions matter to you, optionally with a target CPA or target ROAS.
• Assets, meaning text, images and videos.
• Audience signals, which according to Google guide and speed up the learning.

Google then decides where your ad appears. In e-commerce, the product feed from Merchant Center comes on top and gives the automation a clear structure. How to set the feed up properly is covered in Google Merchant Center setup.

Demand Gen: visual formats where people watch instead of search

According to Google, Demand Gen campaigns drive engagement and action on YouTube. The ads serve on YouTube including Shorts, in Discover, in Gmail and on the Google Display Network. The formats are visual: images in several aspect ratios, videos in horizontal, square and vertical orientation, carousels with 2 to 10 cards. For targeting, Google recommends lookalike segments, meaning people similar to your existing customers, website visitors or channel viewers.

The core difference is the moment. Performance Max can also serve in Google Search, where someone is actively looking for something. Demand Gen reaches people while they watch videos, scroll through Discover or read email. That’s where interest is created, not collected.

2. Data, budget, measurement: what each campaign needs

Data

Both types bid on conversions or conversion value; Demand Gen can also bid on clicks or a target impression share. That means both learn from what you measure. If your account measures the wrong things, such as clicks on “Contact” counted as conversions, both will optimise at full power towards the wrong thing. Before you launch either, check the measurement. The conversion tracking health check shows how to do that systematically.

Budget

For both types, Google shows up to three budget tiers during setup. Google calls the lowest tier the recommended minimum budget. For Demand Gen campaigns using target CPA bidding, Google recommends a budget of at least ten times your target CPA. With a target CPA of €40, that’s €400. If your budget is well below that, the campaign learns more slowly, because according to Google the budget settings affect how quickly it can optimise for conversions.

Measurement traps

Three things to watch with both types:

• Consent: in Germany, visitors without consent are missing from your conversions, and modelling only kicks in above a minimum number of clicks. Small accounts see less than actually happens. Why is explained in Cookies explained for business owners.
• Performance Max is less opaque than it used to be. Google now offers a search terms and landing pages report for Performance Max campaigns, with data from March 2023, and a channel performance report that shows cost and conversions by channel: Search, Display Network, YouTube, Discover, Maps, Gmail and search partners. You add negative keywords for Search and Shopping inventory at account or campaign level. Use these reports before you give a Performance Max campaign more budget.
• Demand Gen often gets measured against the wrong yardstick. In my view, someone who wasn’t searching decides less often on the spot. If you compare Demand Gen with the cost per enquiry of a Search campaign, it almost always loses. Decide beforehand what role it should play and how you’ll measure it.

3. The decision table

The table is my assessment, not a rule from Google. It assumes your conversion tracking is clean.

Two notes. Performance Max without a product feed in lead generation is the case where I’m most cautious; the full assessment is in Performance Max campaigns: when they work and when they don’t. And Demand Gen doesn’t replace a Search campaign; it complements one when search has nothing more to give.

The bottom line

• Performance Max collects demand across every Google channel with one goal, including Search. Demand Gen creates demand on YouTube, Discover, Gmail and the Display Network.
• Both learn from conversions. Wrong measurement makes both expensive.
• Google shows budget tiers for both during setup; the lowest is the recommended minimum. For Demand Gen with target CPA, Google recommends a budget of at least ten times the target CPA.
• Performance Max now has a search terms report and a channel report, and allows negative keywords. Use them.
• Measure Demand Gen by its role, not by the cost per enquiry of a Search campaign.

Choosing between Demand Gen and Performance Max? That decision is exactly a case for the Clarity Session: from €390, a 60-minute video call with your numbers and your goal on the table. Afterwards you know which campaign type fits, with what budget, and how to measure it. If your account is already running and you want it fully checked, the Google Ads audit from €1,900 covers that. Whether the session fits is something you can check first in a free intro call. Book a free intro call.

FAQ

What’s the difference between Demand Gen and Performance Max?

Performance Max serves from one campaign across the entire Google Ads inventory, including Search. Demand Gen runs on YouTube, Discover, Gmail and the Display Network and relies on visual formats to spark interest among people who aren’t searching right now.

Does Performance Max show search terms?

Yes. Google offers a search terms and landing pages report for Performance Max campaigns, with data from March 2023. You’ll find it via the Search terms report in the Campaigns menu, under “Search terms and landing pages for Performance Max”. You exclude unwanted terms for Search and Shopping inventory with negative keywords at account or campaign level.

What budget do I need for Demand Gen?

Google shows budget tiers during setup and calls the lowest one the recommended minimum. With target CPA bidding, Google recommends a budget of at least ten times your target CPA.

Can I run both campaign types at the same time?

Yes; they partly reach the same channels, such as YouTube, Gmail and Discover. Give each campaign a clear role and don’t compare them by the same yardstick, or you’ll lose track of which one is paid for what.