Shops stock fewer umbrellas in the summer. Similarly, ice cream trucks aren’t out selling soft serve in the middle of winter.

For marketers, seasonality is easy to predict, but other demand factors are far less obvious—yet the same principle applies.

Consider economic trends: when interest rates drop, demand for big-ticket purchases like cars and home renovations often surges. If advertisers rely solely on platform data to inform bidding decisions, they risk missing out on these high-intent buyers just as demand peaks.

This is why advertisers should consider adopting demand-led bidding—a strategy where programmatic bidding decisions are influenced by external factors that impact consumer behavior.

These factors can include market trends, inventory levels, competitor activity, and even real-time signals like currency fluctuations or economic shifts. Rather than sticking to rigid budget constraints, demand-led bidding ensures ad spend scales in response to real market demand.

To explore the power of this strategy (including how one client used it to more than double revenue) we spoke to PPC expert Lucy Smith, Head of Search at Incubeta, on a recent episode of the Paid Media Lab podcast.

Lucy shared valuable insights on demand-led bidding and how B2B and eCommerce marketers can use target ROAS (tROAS) or target CPA (tCPA) to optimize their campaigns. 

Watch the full episode here, or get the written takeaways from the session below:

Timestamps: 

00:00 - Intro

01:06 - Insight into new PMax controls

03:31 - Overview of demand-led bidding (+why it’s so important)

05:52 - Who benefits the most from demand-led bidding

07:27 - Considerations when approaching a demand-led strategy

09:25 - Real-world examples to consider

10:50 - Lucy’s first-hand experience & pitfalls to consider

15:05 - How long to wait before deciding to make changes

16:10 - Expectation setting & communication 

18:12 - Technical considerations to be aware of 

20:52 - Recommended tools / scripts

23:16 - PMaximiser rundown

24:28 - Key advice for implementing demand-led bidding

26:56 - Final thoughts / outro

For all of Lucy’s tips, tricks, and insights on demand-led bidding, tROAS / tCPA, and much more – watch the full episode above, and make sure to subscribe to the Lunio YouTube channel to watch full episodes of the Paid Media Lab podcast, featuring insights from top PPC professionals. 

Alternatively, follow the podcast on Spotify, Apple Podcasts, or Amazon Music to get new episodes delivered straight to your feed.

What is demand-led bidding?

Traditional PPC budgeting involves setting a fixed monthly budget and trying to optimize performance within that constraint. Demand-led bidding flips this approach on its head by allowing real-time market demand to dictate spend levels.

Instead of capping ad spend arbitrarily, advertisers focus on efficiency targets like tROAS or tCPA and allow budgets to scale up or down based on user demand and conversion potential.

For example:

• If demand is high, spending increases to capture more traffic and revenue.
• If demand is low, spend is naturally reduced to avoid inefficient spend.

This approach ensures that budgets are deployed in the most profitable way possible, rather than being wasted on low-intent traffic during slow periods.

Why demand-led bidding is essential in 2025

As Lucy highlighted, marketing teams are increasingly expected to do more with less. Whether due to economic uncertainty, budget constraints, or evolving consumer behavior, advertisers need a way to maximize efficiency.

Key benefits

• Maximizes efficiency – Only spends when demand and conversion potential are strong.
• Increases agility – Allows marketers to adjust spend dynamically rather than sticking to rigid budgets.
• Improves profitability – Ensures ad spend is aligned with real-time revenue-driving opportunities.
• Gives a competitive edge – Brands that optimize based on demand gain an advantage over those locked into fixed budgets.

When should you use demand-led bidding?

While demand-led bidding offers significant advantages, it’s not the right fit for every business.

Lucy highlighted a few key conditions where this strategy works best:

Businesses with high conversion volume

Platforms like Google Ads rely on machine learning to optimize bids effectively. If an account has too few conversions, smart bidding algorithms won’t have enough data to adjust spend based on demand fluctuations.

Shorter sales cycles

The shorter the time from click to conversion, the easier it is for demand-led bidding to adapt. Long B2B sales cycles can make it harder to align spend with immediate demand changes.

Value-based bidding and first-party data usage

Using value-based bidding (tROAS) or lead scoring ensures that demand-led bidding optimizes toward high-value customers rather than just driving volume.

Situations where demand-led bidding isn't ideal

Low conversion volume accounts

Demand-led bidding relies heavily on machine learning and automated bidding strategies, which require a substantial volume of conversions to function effectively. 

When conversion volume is too low, the algorithm lacks the necessary data to make informed bidding decisions, leading to erratic spending patterns and potential inefficiencies. Smaller accounts may find it difficult to see consistent performance improvements using this approach.

Businesses with long, complex sales cycles

For companies with lengthy sales cycles—such as high-ticket B2B services or enterprise software—demand signals may not align with conversion timelines. 

If a lead takes several months to close, real-time bidding adjustments based on immediate demand may not provide meaningful insights. Instead, a more controlled budget allocation approach with long-term data analysis might be more effective.

Advertisers who lack first-party data for value-based bidding

Demand-led bidding thrives when advertisers can feed rich first-party data into Google Ads to inform bidding decisions. 

Businesses that lack proper conversion tracking, CRM integrations, or lead scoring frameworks may struggle to optimize effectively. Without a clear understanding of customer lifetime value or lead quality, automated bidding strategies may allocate spend inefficiently, leading to wasted budget.

How to implement demand-led bidding in 2025

Get finance buy-in

Lucy emphasized the importance of aligning with finance teams early in the process. Since demand-led bidding removes fixed budget constraints, finance teams need visibility into forecasting and expected spend fluctuations.

Use forecasting tools

To estimate demand-based spend, leverage tools like:

• Google Ads Performance Planner
• Looker dashboards
• Historical data trend analysis

This helps predict seasonal demand shifts and align stakeholders on potential budget fluctuations.

Optimize for the right efficiency target

Choosing the right bidding strategy is crucial:

• Target ROAS (tROAS) – Best for revenue-driven campaigns (SaaS, eCommerce, trials, etc.)
• Target CPA (tCPA) – Best for lead generation or B2B sales cycles

Avoid knee-jerk reactions

One of the biggest mistakes advertisers make is overcorrecting too soon. If conversions take 7 days on average, wait at least that long before making bid adjustments. 

Reacting too quickly can disrupt Google’s machine learning algorithms, causing inefficient spend fluctuations.

Leverage seasonality adjustments

For businesses with predictable demand spikes, Lucy suggests using seasonality adjustments in Google Ads. 

This allows advertisers to proactively signal expected conversion rate increases (e.g., during a big sale event), so bidding algorithms can ramp up spend accordingly.

Monitor and adjust based on performance data

Since demand-led bidding removes fixed budgets, robust reporting is essential to ensure spend is delivering strong results. Use:

• Google Ads reporting tools
• Custom Looker dashboards
• Scripts (e.g. Mike Rhodes PMax scripts) to track asset performance

Lucy also called out the Pmaximizer script, which provides greater insights into PMax campaigns and provides suggestions for optimizations. 

Final thoughts

Demand-led bidding is a powerful strategy for advertisers looking to scale efficiently, increase their agility, and maximize profitability. 

By allowing real-time demand to dictate ad spend, marketers can capitalize on high-intent traffic—without being constrained by fixed budgets.

Just keep in mind that this approach requires careful planning, stakeholder buy-in, and a strong understanding of efficiency targets (tROAS or tCPA) to be successful. However, If implemented correctly, it can drive significant revenue growth—all while reducing wasted spend.

Key takeaways

• Demand-led bidding removes fixed budgets and aligns spend with market demand.
• The strategy works best for high-volume, short sales cycle businesses using value-based bidding.
• Requires finance team buy-in, forecasting, and a data-driven approach.
• Avoid making knee-jerk bid adjustments—let conversion cycles complete.
• Use seasonality adjustments to preemptively optimize for demand spikes.
• Ensure robust reporting and tracking to monitor performance.

If you haven’t already, make sure to connect with Lucy Smith on LinkedIn for additional thoughts and insights into demand-led bidding, as well as a whole other host of PPC topics. 

Watch Lucy’s full episode of the Paid Media Lab for the full context and additional discussion on everything we’ve covered here, plus some additional tips and tricks from Lucy to ensure your demand-led strategy is fully optimal.

Subscribe to the Paid Media Lab podcast on YouTube, Spotify, Apple Podcasts, Amazon Music or wherever else you get your podcasts for more impactful discussions on all things paid media–featuring leading voices from the PPC industry.