YouTube Ads 2025: Demand Gen & AI are transforming video marketing

YouTube is a key platform for branding and reach - a channel to make brands visible and generate affordable traffic. Even today, YouTube remains a central part of marketing strategy, especially in the top-of-funnel area. However, with the introduction of Demand Gen campaigns and the increased use of artificial intelligence, new opportunities arise: Branding and performance can now be combined, allowing brands not only to increase their reach but also to strategically and measurably optimize their performance. 

In the past, YouTube was considered a platform for 'top of funnel' strategies. Today, it's a conversion engine. Thanks to AI-driven automation, marketers can not only target audiences precisely but also dynamically manage bidding strategies such as 'maximize conversions' or 'target ROAS'. AI analyzes in real-time which users are most likely to convert, ensuring that budgets are deployed efficiently. 

Demand Gen takes it a step further: It combines video and image ads in a single campaign that runs across YouTube, Discover, and Gmail. This means more reach, more touchpoints, and more opportunities to engage your audience to take action. 

Before diving deeper into the strategies, it's worth looking at the importance of YouTube in the marketing mix and why Demand Gen is the future for anyone serious about performance. 

Why YouTube? 

Image source: Google Support 

In a digital world, YouTube is a central part of the marketing mix. According to Statista, more than 2 billion users worldwide are active on YouTube monthly, which corresponds to about 40% of global internet users. In Germany alone, around 72.6 million people use the platform monthly, with a daily reach of about 37% (survey 2022). 

This reach offers advertisers enormous opportunities. Users spend a lot of time on the platform, consuming content purposely and responding to recommendations from their favorite creators. With AI-powered algorithms, these users can be analyzed even more accurately, and personalized ads can be served in real time. This not only increases the effectiveness of video ads but also significantly boosts conversion opportunities. 

What is a Demand Gen campaign? 

Demand Gen campaigns are the evolution of previous video action campaigns and offer a powerful way to boost conversions across various Google platforms. Instead of relying solely on YouTube, Demand Gen combines different formats, including video, image, and carousel, and plays them out on YouTube, Discover, and Gmail. 

The goal is not just to reach users but to actively engage them to take action. Through AI-powered automation, audiences are precisely identified, ads dynamically optimized, and bidding strategies such as 'maximize conversions' or 'target ROAS' efficiently implemented. 

While video action campaigns already represented a significant improvement over previous TrueView for Action campaigns, Demand Gen goes a step further: More reach, more formats, more AI power. Google reports that advertisers can achieve up to 20% higher conversion rates with Demand Gen, thanks to a much more flexible campaign structure. 

Where are Demand Gen campaigns delivered and what do they look like? 

Demand Gen campaigns offer maximum flexibility in delivering your ads. Instead of relying only on skippable in-stream ads like before with TrueView for Action, you can now use different formats: 

• Video ads (incl. YouTube Shorts) 

• In-feed ads 

• Carousel and image ads 

These ads not only appear in the YouTube homepage feed but also in the 'recommended videos' section, on search results pages, and in Google Discover and Gmail. Additionally, they are played across Google video partners, providing significantly larger reach. 

What's special: AI automatically decides where your ads will have the most impact. It analyzes user behavior, conversion potential, and context, choosing the best placement in real-time. 

For optimal performance, Google recommends using videos at least 10 seconds long. You can also add multiple assets like call-to-actions, headlines, and descriptions. The AI automatically tests these combinations and selects the variants that achieve the highest engagement and best conversion rates. 

Success with AI: Best Practices for Demand Gen Campaigns 

Video ads on YouTube are rapidly evolving, along with the possibilities to boost conversions. Thanks to AI, marketers can control and automatically optimize their YouTube ads more precisely. Those who want to succeed should follow these best practices. 

1. Utilize AI-powered targeting 

Reaching the right audience determines the success of the campaign. AI-optimized YouTube ads analyze behavior and dynamically adjust targeting to maximize conversions. This minimizes wastage and uses budgets efficiently. 

2. Deploy automated video creatives 

Not every video ad achieves maximum impact right away. With AI, video creatives can be automatically tested and optimized: Variants of intro, CTA, or visual layout are analyzed to achieve the highest engagement and conversion rate. 

3. Intelligently optimize bidding strategies 

YouTube ads can dynamically adjust bids using AI, based on historical data, real-time behavior, and conversion potential. Strategies like 'maximize conversions' or 'target ROAS' can thus be implemented much more efficiently. 

4. Continuously monitor performance 

AI-powered dashboards can provide insights into which creatives, call-to-actions, or formats perform best. Marketing experts can make data-driven decisions, optimize campaigns, and increase ROI in the long term. 

5. Test and learn with AI 

Regular experiments are crucial: AI automatically identifies the best combinations of assets, video formats, and text. This saves time and ensures that every campaign is continuously improved. 

Anyone wanting to execute campaigns successfully on YouTube cannot do without AI anymore. With AI-based strategies for video ads, conversions can be increased, budgets used efficiently, and creative processes automated. Marketing experts who apply these best practices secure a clear competitive advantage. 

Which AI-supported creatives are suitable for video ads? 

ABCD principle 

Creating relevant advertising content is key to the success of any YouTube campaign. The first few seconds of a video are crucial to capturing the viewers' attention. Using visually appealing, high-contrast images and ensuring the brand is recognizable from the start and remains visible throughout the video provides a good foundation. 

With AI, creatives' variants can be generated and optimized automatically. The AI analyzes texts, images, video clips, and call-to-actions to determine which combinations achieve the highest engagement and conversion rates. This allows for automatic testing of which storytelling elements and visual styles appeal best to your audience. 

Trying to tell a story within the video that highlights important USPs while also evoking emotions can have a very positive influence. AI can assist in automatically identifying the most effective storytelling elements, visual styles, and call-to-actions to enhance the performance of video ads. Additionally, every video should end with a clear call-to-action (CTA) to encourage interaction. For further information, Google's ABCD principle for effective creatives can be used as a guide. 

AI-powered bidding strategies for YouTube Demand Gen campaigns 

As Demand Gen campaigns focus on conversions, conversion-related bidding strategies can be specifically used with AI support, like 'target CPA'. The AI continuously analyzes historical data, user behavior, and current performance to dynamically adjust bids and maximize conversions efficiently. 

It is important to note that the set campaign budget influences how quickly the AI algorithm can optimize the campaign regarding conversions. Particularly for the 'target CPA' bidding strategy, a daily budget that is at least 15 times the desired CPA is recommended to provide the AI with enough data to make accurate decisions. 

Advanced AI-powered strategies, such as 'target ROAS' or 'maximize conversion value,' become available for Demand Gen campaigns only after at least 30 conversions have been achieved within the campaign. The AI then ensures that budgets and bids are automatically aligned to the most profitable users and time windows. 

Why test Demand Gen campaigns with the help of AI? 

Demand Gen campaigns are the future for performance marketing on YouTube and beyond. They offer an effective way to increase conversions, maximize reach, and sustainably improve ROI. Using AI makes the difference: precise targeting, dynamic bid adjustments, and automatic optimization of creatives ensure budgets are used efficiently and wastage is minimized. 

Regular testing with AI is crucial to identify the best combinations of video formats, storytelling elements, and call-to-actions. This way, campaigns are continuously optimized and measurable results are achieved. 

Does your company need support in planning, creating, or optimizing Demand Gen campaigns? The Warriors from Berlin are ready - contact us for a non-binding offer and secure your lead in AI-supported marketing.