Google Ads: Performance Max vs. Demand Gen

Introduction

With increasing buzz in the digital marketing space, especially among paid media professionals and brand-side marketers, the debate between Performance Max and Demand Gen campaigns on Google Ads is heating up. So, what are they, how do they differ, and when should you use each?

Based on firsthand experience running these campaigns for 9-figure brands across multiple regions, working closely with Google Partners and being an early adopter of both AI-powered campaign types, here’s a breakdown of their strengths, unique applications, and limitations.

What They Have in Common

Despite their differences, Performance Max and Demand Gen campaigns share some foundational characteristics:

• ✨ AI-Powered Optimization: Both rely heavily on Google’s machine learning to deliver optimal results based on intent and signals.
• 🚀 Massive Reach: These campaigns can drive substantial impressions & traffic across Google-owned properties.
• 🔍 Product Integration: Both allow seamless integration with your Google Merchant Center, placing your products front and center.

Performance Max: The 360-Degree Conversion Machine

Performance Max (PMax) is Google Ads' flagship AI campaign type, designed to maximize performance across all Google inventory including Search, Shopping, YouTube, Gmail, and Display. It is also considered as a spin-off for Google shopping ads & local store campaigns.

Why It's a Game-Changer:

• ⚡ One Campaign, All Channels: PMax runs simultaneously across all Google properties.
• 📈 Lower Funnel Power: Perfect for lead generation and eCommerce sales when optimized correctly.
• 💪 Goal-Based Flexibility: You can tailor PMax to act as a supportive layer for ongoing campaigns or have it focus exclusively on high-converting actions like purchases, acting primarly as a shopping ads campaign.

Pro Tip:

To get the best results, set one clear campaign goal (e.g., purchases). This gives Google’s algorithm the clearest intent, and allows it to optimize delivery accordingly—typically prioritizing Shopping Ads when focusing on eCommerce.

Limitations:

Despite its power, PMax is somewhat of a black box. There’s limited visibility into what’s driving performance, making optimization and insights more difficult compared to traditional campaigns.

Unfortunately, even 3+ years into going live, until now there's still a signfnicant gap of insights available on the campaigns for marketers to deeply understand what's going on, sort of similar to how deep machine learning goes where you have the inputs, outputs (conversions) with lots of unknowns of what's going on in-between.

Demand Gen: The New Age Awareness Driver

Demand Gen is the evolved version of Discovery Ads, now more intelligent, dynamic, and flexible. It spans across YouTube, Gmail, and Google Discovery Feed with improved control and AI optimization.

Why It Stands Out:

• 🌟 Advanced Targeting: Marketers can now apply different audience targeting such as languages & locations at the campaign, and ad group levels—a level of flexibility previously unheard of in Google Ads.
• 📲 Visual Dynamism: Demand Gen offers visual-forward formats and allows prioritizing images or video creatives within each ad group.
• ✨ Perfect for GTM: This campaign type excels at generating awareness and engagement for new product launches, events, or services. It seems to have a much bigger impact in terms of genuine awraeness & engagement with the target audience without having to go crazy on budget. In fact, it is constantly the top campaign that most reaches acquinatences & friends of friends that are part of the target audience. So beyond data, I & along with brand managers have actually experienced its impact on the ground.

Limitations:

• ⛔ Not Ideal for Hard Conversions: While you may see leads like WhatsApp clicks or subscriptions, Demand Gen doesn’t deliver direct purchases or premium leads as effectively as Search or PMax.
• ❓ YouTube-Heavy Delivery: The largest share of impressions seems to come from YouTube. This may limit reach among users with YouTube Premium, which can be a downside for luxury or high-income segment targeting.

Conclusion: A Dual Approach for Smart Marketers

Both Performance Max and Demand Gen have distinct, valuable roles to play in a full-funnel marketing strategy:

• ✔️ Use Performance Max when your goal is bottom-funnel performance—lead gen or eCommerce. It complements search campaigns and can be your second-most important ad type after Search. In fact, I would always recommend having both running simultaneously.
• ✔️ Use Demand Gen when you're focused on awareness, video views, or driving mass traffic and engagement for newer initiatives.

In essence, Performance Max = Performance, while Demand Gen = Demand Creation.

The real magic happens when you leverage both in tandem: PMax handles the conversions, while Demand Gen sets the stage and fills your pipeline.

Want help crafting a smart full-funnel strategy with PMax & Demand Gen?

Get in touch for hands-on support and customized campaign planning that drives real growth.