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Performance Max vs Demand Gen: which Google campaign to run first

Performance Max finds converting customers across all of Google. Demand Gen gives you control of creative, audiences and channels on Google's visual surfaces. Here is which one we start with, how we split the budget and how we read the result.

8 to 10 min read Step-by-step Updated November 2026

The short version

The short answer

Run Performance Max first if you need sales or leads from Google and have conversion tracking you trust. Add Demand Gen when you have video or image creative worth testing and you want to choose who sees it and where.

  1. They do different jobsPerformance Max goes after conversions across every channel. Demand Gen makes new demand on visual surfaces.
  2. Search is the biggest splitPerformance Max can serve on Search. Demand Gen cannot.
  3. Pick by what you haveYour feed, your creative, your conversion volume and your budget decide it.
  4. Test Demand Gen at about 12%Our worked example runs A$80 a day for six weeks on Maximise conversions.
  5. Two 2026 changes matterDisplay is moving into Demand Gen, and Lookalike segments now act as a signal.
On this page
  1. 01 · Performance Max or Demand Gen, in one paragraph
  2. 02 · The differences that change what you do
  3. 03 · Which to run, by what you have
  4. 04 · How to split the budget: a worked example in AUD
  5. 05 · How we set up Demand Gen next to Performance Max
  6. 06 · How to read the results
  7. 07 · What changed in 2026
  8. 08 · Questions we get about Performance Max and Demand Gen
  9. 09 · Sources

Performance Max or Demand Gen, in one paragraph

Use Performance Max when the job is finding more converting customers from one campaign across Search, YouTube, Display, Discover, Gmail and Maps, and you are comfortable steering Google AI instead of targeting by hand. Use Demand Gen when the job is reaching people who are not searching for you yet, on YouTube, Discover, Gmail and the Google Display Network, with your own choice of audience, channel and creative test. Most Australian ecommerce accounts we run should start with Search and Performance Max, then add Demand Gen once capture is working and there is creative worth testing.

You can run both in the same account. They have different jobs, so we give each its own budget and its own success measure. Our Google Ads strategy guide shows how they fit with Search and Shopping.

The differences that change what you do

SettingPerformance MaxDemand Gen
Goal in Google's wordsMaximise performance across all of Google's channels and surfacesGenerate demand and deliver business results on Google's most visual surfaces
Where ads can showSearch, YouTube including Shorts, Display, Discover, Gmail, MapsYouTube Shorts, in-feed, Home feed, watch next and YouTube Search, Discover, Gmail, Google Display Network, Maps in beta
Choosing channelsPriority tiers. Google channels stay grouped, and Search partners and the Display Network can be tiered separatelyPick channels manually, for example Shorts only, or use All Google channels
AudiencesAudience signals that guide learning, with no hard targetingAudience segments you choose, including Lookalike segments
BiddingConversions or conversion valueClicks, conversions or conversion value
Search controlsSearch themes, negative keywords, brand exclusions, final URL expansionNone, because it does not serve on Google Search
Creative testingAsset group and asset-level reportingReporting for individual assets and formats, plus creative A/B experiments
ProductsRetail feed formats on all surfaces, including SearchProduct feeds on YouTube, Gmail, Discover and Display, with promotion assets on Shorts and in-stream

Two details catch people out. An exact match keyword in a Search campaign takes priority over Performance Max when the query matches it, while Performance Max search themes carry the same priority as phrase and broad match. And on Demand Gen, you manage content exclusions at account level on the Content suitability page, because topic and placement exclusions are not generally available at campaign or ad group level.

Which to run, by what you have

Start with Performance Max when

  • You sell products and have a clean Merchant Center feed. Fix the feed first, because it drives most of what Performance Max shows.
  • You have a clear conversion goal and accurate conversion values.
  • You spend under about A$10,000 a month on Google. At that level we want every dollar close to purchase intent.

Add Demand Gen when

  • You already make short vertical video for Meta and want to test the same ideas on Shorts. Rebuild them for the placement, and check the framing in our Performance Max preview tool before you upload.
  • Your branded searches and new-customer numbers have stopped growing, so capture campaigns have less demand to catch.
  • You want to run a controlled creative test. Demand Gen has A/B experiments for creative, and you can see each asset's numbers.
  • You want a specific audience, such as a Lookalike of recent buyers.

Skip Demand Gen for now when

  • Your only creative is a product photo on white. Google's guidance is brand and inspirational imagery with minimal text, and including more assets improves your chances.
  • You cannot measure new customers separately from returning ones. You will have no way to tell if it worked.

Lead generation follows the same logic. Performance Max needs offline conversion data to tell a good lead from a cheap one, so send qualified leads back to Google before you ask it to find more.

How to split the budget: a worked example in AUD

Take an example store spending A$20,000 a month on Google Ads, excluding GST, with a target cost per purchase of A$60.

Google recommends a Demand Gen budget of at least 10 times your target CPA when you use target CPA bidding. That is A$600 a day, or A$18,000 over 30 days and 90% of this store's budget. So we would not start on target CPA. Google also recommends starting on Maximise conversions if you are new to Demand Gen, and moving to target CPA or target ROAS after at least 50 conversions.

  1. Set the test budget. We start at about 12%: A$80 a day, or A$2,400 over 30 days. The other A$17,600 stays on Search, Shopping and Performance Max.
  2. Work out the time it takes. A$80 a day at A$60 per purchase is 1.33 purchases a day, so 50 purchases takes about 38 days. Plan the test for six weeks.
  3. Check the budget panel. The campaign review page suggests up to three daily budgets (Low, Medium and High), and the low level is Google's minimum recommendation. If A$80 sits below it, narrow the test to one channel or raise the budget.
  4. Keep the structure tight. Google recommends consolidating similar audiences into fewer ad groups. We start with one or two.

If purchases are too scarce for the campaign to learn, Google suggests optimising for a lighter event such as add to basket. We only do that with a separate check on purchases, because a cheap add to basket proves little. Our paid media budget planner does this split across channels.

Planning around a sale? Start the test at least six weeks before the peak so it has finished learning, or wait until after it. Our BFCM budget and launch plan has the timeline we work to.

How we set up Demand Gen next to Performance Max

  1. Give each its own job. Performance Max is judged on new-customer sales or qualified leads. Demand Gen is judged on new customers reached and whether blended demand rises.
  2. Use different creative. Put your strongest tested sales angles in Performance Max asset groups. Use Demand Gen for new concepts, and promote what wins.
  3. Choose channels on purpose. A vertical creator video can run on YouTube Shorts only. Start with the channels your creative was made for, then widen.
  4. Match the assets to the channel. Vertical 9:16 images are recommended for Shorts (minimum 600 x 1,067, recommended 1,080 x 1,920). Videos must run at least 5 seconds, and under 10 seconds they are ineligible for YouTube in-stream. Logos are square, up to 150 KB.
  5. Send the click somewhere that continues the story. A cold viewer needs more than a product page, so match the ad with a custom landing page when the angle is specific.
  6. Watch sensitive categories. Ads in these categories are generally limited to YouTube inventory and predefined Google audiences, and alcohol advertisers cannot use product feeds.

If you would rather hand this to us, our Google Ads management team runs Search, Shopping, Performance Max and Demand Gen as one system.

How to read the results

Reading both campaigns in platform columns will flatter both. Google's help pages do not say how the two share auctions on YouTube, Gmail and Discover, so we assume they overlap and check the total.

  • Performance Max: open Campaigns, then Insights and reports, then Channel performance. It shows how each channel contributes to your goals, and you can segment by ads using product data. Check that spend has not drifted to a channel your creative does not suit.
  • Demand Gen: use Segment by network to compare channels, and compare individual assets. Run a creative A/B experiment when you need a clean answer on one concept.
  • The whole account: compare new customers, total revenue and branded search volume before and during the test. Our attribution gap diagnostic helps when platform and store numbers disagree.
  • Lift studies: Google offers conversion lift and search lift measurement for Demand Gen where your account is eligible, and that is the strongest answer to whether it created sales you would not have had.

Our call at six weeks: keep Demand Gen if new customers and blended revenue rose by enough to cover its cost. If only platform-reported conversions rose, cut it and try a different concept before you try more budget.

What changed in 2026

Display is moving into Demand Gen

Google Display Ads campaigns now have their home as the Google Display Network inside Demand Gen. From June 2026, eligible advertisers can move existing campaigns with a migration tool, in Campaigns, under Edit, Upgrade to Demand Gen. Google says new Display campaigns will later be created only in Demand Gen, and remaining eligible campaigns will be migrated automatically. Display-only buying stays available.

Use the tool over a manual rebuild. It carries up to 42 days of performance history, which Google says cuts learning to about 1 to 2 days. A migrated campaign cannot be switched back, and Google advises against migrating during a live lift study.

Lookalike segments now act as a signal

Since March 2026, Google has been moving Demand Gen Lookalike segments to a suggestion mode in phases. Your seed list becomes a signal, and the narrow, balanced and broad slider no longer restricts reach to a 2.5%, 5% or 10% threshold. A "signal" tag appears next to the segment in audience reporting. Advertisers who want the old behaviour can apply to opt out through Google's form.

In practice, a Lookalike campaign can now reach people outside your seed audience, so Demand Gen targeting is less of a hard wall than it was. Feed it recent buyers and other high-intent lists, and judge it on new customers instead of audience definition.

Questions we get about Performance Max and Demand Gen

What is the difference between Performance Max and Demand Gen?

Performance Max finds converting customers across all of Google's channels, including Search, using audience signals with no hard targeting. Demand Gen runs on YouTube, Discover, Gmail and the Google Display Network, does not serve on Search, and gives you more control over audiences, channels and creative tests.

Should I run Performance Max and Demand Gen together?

Yes, once Search and Performance Max are working. Give each its own budget and job, use new concepts in Demand Gen, and judge the pair on new customers and blended revenue.

Does Demand Gen replace Performance Max?

No. Demand Gen has no Google Search inventory, so it cannot catch people searching for what you sell. It has replaced Video Action Campaigns, and Display campaigns are moving into it.

How much should I spend on Demand Gen?

We start at about 12% of the Google budget, on Maximise conversions, for six weeks. For target CPA bidding, Google recommends a budget of at least 10 times your target CPA, and moving to target CPA or target ROAS after at least 50 conversions.

Can Demand Gen use a product feed?

Yes. Demand Gen can use a Google Merchant Center product feed on YouTube, Gmail, Discover and the Google Display Network, and promotion assets can show on YouTube Shorts and in-stream formats when you use one.

Do Google Display campaigns still exist?

Google is moving them into Demand Gen as the Google Display Network. Existing campaigns can stay editable until they migrate. Eligible advertisers can move them with the migration tool from June 2026, and remaining eligible campaigns will be migrated automatically later.

Sources

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