YouTube Shorts Ads and Demand Gen in 2026: The Complete YouTube PPC Strategy After the Video Action Campaign Migration

What Is the Demand Gen Upgrade — and Why Does It Matter for YouTube Advertisers?

If you’re still running Video Action Campaigns (VACs) on Google Ads, you may have noticed something different in your account by April 2026: they’re gone. Google completed the full migration of all remaining Video Action Campaigns to Demand Gen campaigns in April 2026, closing a chapter that began with the first wave of upgrades in early 2025. For YouTube PPC advertisers, this isn’t just a rebrand — it’s a fundamental shift in how paid video works across Google’s entire ecosystem.

Demand Gen isn’t limited to YouTube. It runs across YouTube in-stream, YouTube Shorts, YouTube in-feed, Google Discover, and Gmail — all from a single campaign. That breadth changes how you need to think about creative, bidding, and performance measurement. At Rosh Media, we’ve been tracking this transition closely, and the data coming out of Q1 2026 tells a clear story: brands that have adapted their creative strategy to the Demand Gen format are seeing dramatically better efficiency than those who simply let the auto-upgrade happen without making changes.

YouTube Shorts Ads in 2026: The Numbers You Need to See

The most compelling reason to pay close attention to Demand Gen right now is YouTube Shorts. As of Q1 2026, Shorts ads are delivering metrics that most advertisers haven’t seen on traditional in-stream formats in years:

• Average CPM: $4.85 — compared to $10–$18 CPM for skippable in-stream ads in most verticals
• Average CTR: 1.24% — roughly double the click-through efficiency of standard in-stream formats
• Daily reach: 50+ billion views — YouTube Shorts crossed this milestone in late 2025 and continues to grow
• Conversion rate delta: +3–7% — advertisers testing Demand Gen campaigns that include Shorts placements reported a 156% increase in impressions with only a modest 3–7% improvement in conversion rates, suggesting that the AI targeting maintains quality at scale

These numbers explain why Shorts has become the highest-priority placement inside Demand Gen. But they also create a creative problem: a 60-second in-stream ad reformatted to 9:16 vertical almost never works. Shorts ads require content built natively for the format — fast hooks in the first 2 seconds, loop-friendly edits, and a visible CTA without relying on audio.

How Does Demand Gen Targeting Work in 2026?

One of the biggest differences between the old Video Action Campaigns and Demand Gen is how the AI handles targeting. VACs operated primarily on intent signals from Google Search. Demand Gen expands that model to include:

• Viewing pattern analysis — Google’s AI analyzes what content users watch, skip, or engage with on YouTube to predict ad receptiveness
• Cross-platform signal fusion — signals from Discover, Gmail, and Search are combined to build richer audience profiles
• Predictive conversion modeling — the system identifies high-intent moments not just from search queries but from engagement micro-signals across the full Google ecosystem
• Similar segments — Demand Gen includes a “similar audiences” feature that goes beyond the deprecated lookalike audiences, using real-time behavioral clustering rather than static seed lists

In practical terms, this means that campaign-level audience controls matter less than they did in VAC-era campaigns. Google’s own data shows that advertisers who remove manual audience restrictions from Demand Gen campaigns see an average 20% increase in conversions at equivalent CPA. This is uncomfortable for many advertisers trained to tighten audience targeting, but the data consistently supports letting the AI find audiences.

What Creative Assets Does a Demand Gen Campaign Actually Need?

This is where most brands stumble in 2026. Demand Gen spans multiple placements, and each placement has distinct creative requirements that can’t be satisfied by a single master video asset:

• YouTube Shorts (9:16 vertical, 6–60 seconds): Native vertical video with a hook in the first 2 seconds and a visible on-screen CTA. No letterboxing, no repurposed landscape content.
• YouTube in-stream (16:9 landscape, skippable at 5 seconds): Your value proposition must land before the skip button appears. The first 5 seconds are the only guaranteed view.
• YouTube in-feed (thumbnail + headline): Still image or short video thumbnail with a compelling headline. This format rewards brand recognition and curiosity gaps.
• Discover and Gmail (image + copy): Static display-style creative with a strong headline. These placements behave more like social feed ads than video placements.

Google recommends uploading a minimum of 5 video assets and 5 image assets per Demand Gen campaign. In practice, advertisers running A/B creative rotations inside Demand Gen report that having 8–12 unique creative variants allows the algorithm to find the right ad-audience match significantly faster than campaigns with 2–3 assets. The system doesn’t just rotate creatives randomly — it matches specific assets to specific placements and audience segments based on predicted performance.

Connected TV: The Demand Gen Placement Most Advertisers Are Ignoring

One feature that flew under the radar when Demand Gen launched is its inclusion of Google TV and Connected TV (CTV) placements. As of early 2026, Demand Gen campaigns that include CTV placements are driving an average of 7% additional conversions at equivalent ROI compared to campaigns without CTV, according to Google’s own benchmark data.

CTV inventory within Demand Gen reaches viewers on smart TVs, streaming apps, and Google TV devices — audiences that are increasingly difficult to reach with traditional digital display or search campaigns. The CTV placement requires the same 16:9 landscape video format as in-stream, so if you’re already producing in-stream assets, you’re halfway there. The key difference is that CTV viewers cannot click through directly — CTV is best treated as a brand awareness and recall driver within a broader Demand Gen strategy, not a direct response channel.

How to Measure YouTube PPC Performance After the Demand Gen Migration

The migration from Video Action Campaigns to Demand Gen also changed what metrics matter and how to read them. Several performance signals have shifted:

• View-through conversions are now weighted differently. Demand Gen uses a more conservative view-through attribution window than VACs did, which can make Demand Gen appear to “underperform” VACs on conversion volume if you’re comparing old and new reports without accounting for this change.
• Placement-level reporting is your new best friend. Break out your Demand Gen campaign by placement (Shorts vs. in-stream vs. in-feed vs. Discover) in the Segments report to understand which placements are driving efficiency — then bias your creative investment accordingly.
• Lift measurement matters more than ever. Because Demand Gen is primarily an upper-to-mid funnel format, Google’s Brand Lift and Conversion Lift tools are essential for proving incremental value — especially for campaigns where last-click attribution would systematically undercredit video’s role in the conversion path.

5 Immediate Actions for YouTube PPC Advertisers in May 2026

If your Video Action Campaigns were auto-upgraded to Demand Gen without any intervention, here’s what to do right now:

1. Audit your asset library. The auto-upgrade kept your existing video assets, but those assets were built for landscape in-stream, not for Shorts. Add at least two native 9:16 vertical video assets to every active Demand Gen campaign.
2. Check your audience settings. If your upgraded campaign inherited restrictive VAC audience targeting, test a broad-match version alongside it to see if the AI-driven targeting outperforms your manual segments.
3. Enable the product feed if you’re in e-commerce. Demand Gen supports a direct Merchant Center product feed connection, allowing users to scroll product cards within Shorts and in-stream ads. This is one of the highest-ROI features in the platform and is frequently missed in auto-upgraded campaigns.
4. Set up placement-level reporting. Navigate to Segments → Placement to see how Shorts, in-stream, in-feed, Discover, and Gmail are performing individually. This data is critical for creative investment decisions.
5. Run a Conversion Lift study. If Demand Gen is a significant part of your budget, run Google’s Conversion Lift measurement tool for at least 4 weeks before drawing conclusions. Demand Gen’s incrementality is consistently underrepresented in last-click models.

The shift to Demand Gen is one of the most significant structural changes to YouTube PPC since TrueView launched in 2010. Advertisers who treat it as a simple rebrand of their old Video Action Campaigns will see declining performance. Those who adapt their creative, measurement, and bidding strategy to what Demand Gen actually is — a multi-placement, AI-optimized, full-funnel video system — will find it’s one of the most powerful paid channels available in 2026. For a deeper dive into building a full paid and organic video strategy, explore more resources at Rosh Media.