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Do you know that feeling when Google spends an unnecessarily large part of your daily budget on products with your lowest margins?
Or that moment when you find out that up to 72% of incremental YouTube conversions come from completely new customers, but you are not sure how to target them effectively?
As an e-commerce owner, you probably spend a lot of time fine-tuning XML feeds and looking for the optimal ROAS in Shopping or Performance Max campaigns. And every euro wasted on the wrong products hurts.
The good news is that Google is gradually rolling out a set of improvements for Demand Gen campaigns, giving you back what matters most: control over your budget and creatives.
Here is a practical look at how these updates can help turn Demand Gen into higher profit for your e-commerce business, with direct links to the sources behind this information.
Take Back Control Over Your Margins → Custom Labels Are Here
Custom Labels, with values from 0 to 4, have so far mainly been used in Performance Max and standard Shopping campaigns. According to recent findings, Google has quietly expanded their full support to Demand Gen campaigns as well.
Why is this such a big deal? Demand Gen campaigns have massive reach across platforms such as YouTube, Gmail, and Discover. Until now, however, advertisers had to rely heavily on the algorithm.
Thanks to Custom Labels, you no longer have to promote your entire product catalog blindly. You can simply segment your products directly in Google Merchant Center and give your campaigns a clear signal about which products should get priority.
- Push only what makes money: Create a “High Margin” label and target Demand Gen only to these products.
- Quickly clear out slow-moving stock: Label older inventory as “Seasonal Sale” and target it to a specific audience without spending budget on new arrivals.
- Use bestsellers to acquire new customers: Let the algorithm look for new people based only on products you already know perform well and customers love.
This gives you much stronger control over what gets promoted. Although a new campaign type called AI Max is expected to arrive, its current beta version does not yet support Custom Labels, which makes Demand Gen the clear choice for now.
AI Instead of a Video Editor
Automatic Formatting and Gemini
Creating video content is often expensive and time-consuming for e-commerce businesses. But if you already have some vertical video content, for example from Reels or TikTok, Google will make it much easier for you to repurpose it into ads.
As part of the improvements called June’s Demand Gen Drop, the system is now expanding its automatic aspect ratio adaptation. AI can automatically crop and reformat a vertical video not only into a square format, but also into a classic horizontal landscape format. This means one creative can cover all placements across networks without you having to pay a video editor to export additional formats.
The Gemini AI model is also now being integrated directly into campaign creation. When uploading images and videos, this assistant provides automated tips and recommendations on how to optimize your assets so they can drive as many conversions as possible on YouTube.
Accurate Data from Web to App
If you are one of the larger e-commerce businesses that also has its own mobile app to make shopping easier, Google has added a feature called Web to App Acquisition Measurement.
In practice, this means the end of guesswork and inaccuracies. You can finally see exactly how many real installs of your mobile app were driven by a specific Demand Gen campaign that ran “only” on the web, giving you a complete view of the true return on your investment.
Summary for Your E-commerce Business
Demand Gen campaigns are no longer just about building brand awareness through nice-looking videos. Thanks to Custom Labels, you can turn them into a truly performance-focused channel built around margins.
If you have avoided Demand Gen until now because of limited feed control, now is the right time to check your XML feed in Merchant Center, set up your labels, and start testing this new update in practice.
