Google has been releasing its updates to Demand Gen campaigns (the campaign type that runs visual ads across placements such as YouTube, Shorts and Gmail) in batches it calls “Demand Gen Drops”. The August drop, announced on 27 August 2026, and the September drop, announced on 24 September, point in one clear direction: YouTube ads that don’t just get watched, but start a conversation or send people straight to the next step.
Here’s what’s new, what’s still in testing, and how an Australian business might use it heading into the busy end-of-year period.
August: messaging from YouTube ads, and AI video creation
Google’s August drop included three updates:
- Click-to-message from YouTube ads (test). Google is testing features that let viewers start a conversation with a business in a messaging app directly from a Demand Gen ad on YouTube. For service businesses that live on enquiries, that could shorten the gap between “that looks interesting” and “can you quote me?”.
- Travel features. Demand Gen ads for travel advertisers can now surface local activities, events and real-time offers, and personalise hotel ads to show relevant properties to the right audiences.
- Multimodal Video Creation, now generally available in Asset Studio. Advertisers can go from storyboard to horizontal and vertical video assets in one workflow, so ads can run across all Demand Gen inventory.
Google also says the hundreds of improvements it made to Demand Gen in the second half of 2025 are, on average, driving a 30% increase in conversions or conversion value for advertisers. That’s Google’s own average, but it’s a sign of how much the product has changed if you tried it a year or two ago and gave up.
September: Business Agent, one-click image ads and Maps pins
The September drop leaned further into interaction:
- Business Agent for YouTube ads. Viewers can engage with conversational AI alongside video ads that use product feeds, without leaving what they’re watching. Think of it as a sales assistant sitting next to your ad, answering product questions.
- One-click experiences from image ads on YouTube Shorts and Gmail, taking people straight to your landing page. Google says that adding image creatives to Gmail campaigns has delivered a 40% increase in conversions at the same ROI, based on its own data.
- Affiliate location extensions in Google Maps. Retail networks and dealerships can use promoted pins on Maps to reach local audiences as they browse and navigate.
Google also launched a Demand Gen Drops Hub to showcase upcoming updates ahead of the holiday season.
Related: AI video resizing in Performance Max
On a similar theme, Google began telling Performance Max advertisers in August that it would use generative AI to create missing aspect ratios (for example, vertical or square versions) from video assets already in their campaigns. Advertisers had until 4 September to opt out via their account team or Google’s form. If you run PMax with video, it’s worth checking how your videos now appear across placements.
What this means for Australian businesses
A couple of cautions before you jump in. Google’s announcements don’t specify market-by-market availability for every feature, and the messaging feature is explicitly a test. Check what’s actually available in your Google Ads account before planning a campaign around it.
With that said, the direction is useful for smaller advertisers. YouTube used to feel like a channel for big brands with big production budgets. Tools that turn existing images and footage into multiple formats, and ad formats that invite a message or a question, make it much more accessible for a local business, a trades company or an online store.
What to do now
- Revisit Demand Gen if you’ve written it off. Set up a small test campaign with clear conversion tracking and give it a few weeks.
- Gather your raw assets. Good product photos, short phone videos and customer testimonials are the fuel for Asset Studio and AI resizing tools.
- Add image creative to Gmail placements. Given Google’s reported uplift, it’s a low-effort test.
- Get your product feed in shape. Features like Business Agent rely on product feeds, so accurate titles, descriptions, prices and stock levels matter more than ever.
- Be ready for conversations. If you enable messaging, make sure someone (or a well-set-up automated reply) responds quickly. A slow reply wastes the click.
- Review AI-generated video. Check any resized or AI-created assets to make sure products, text and logos still look right.
The end-of-year shopping period is when Demand Gen and YouTube tend to earn their keep, so now is a good time to test. If you’d like help putting together a YouTube and Demand Gen plan that suits your budget, have a chat with the Big Digital team.
Photo: Vitaly Gariev on Unsplash