Google’s ability to track store visits is based on its Location History feature present on Android phones. When enabled, Google’s terms of service enable it to use aggregated, anonymized data location data for a variety of purposes.

So how does the inclusion of store visits affect the Estimated Total Conversions metric? According to new data released by Google this week, retailers in the United States are seeing four times more conversions overall and 10 times more conversions on mobile when they factor store visits into their search ad performance analysis.

In the United States auto and travel verticals, Google says advertisers are seeing twice as many conversions when including store visits data.

As Google’s Surojit Chatterjee, Director of Product Management for Mobile Search Ads notes, “driving a consumer to a dealer lot or hotel is a high value event,” so the increased conversions potentially represent a significant amount in dollar terms.

According to Chatterjee, brands such as Sephora, a cosmetics retailer, and Buffalo Wild Wings, a national franchise restaurant chain, are using store visits to refine their Google ad campaigns.

Chatterjee explains:

Sephora learned that it receives an 18% higher store visits rate from mobile clicks compared to desktop. Based on that data, Sephora optimized its mobile bidding strategy to achieve a 25% higher return on ad spend than when measuring the impact of paid search on ecommerce sales alone. With insights from store visits, Sephora continues to use Local Inventory Ads to let customers looking for lipstick, eyeliner, or perfume know when those products are available at a nearby store.

In the case of Buffalo Wild Wings, Chatterjee says that the franchise “used insights from store visits data to validate and adjust its bidding strategy and realized an 84% lift in conversions.”

A much-needed perspective

Needless to say, understanding the interaction between their online ads and offline customer behavior is crucial for businesses that interact with customers and sell to them offline.

Simply assuming that online ads are driving store visits, and ultimately sales, is not acceptable in a data-driven world where advertisers increasingly need to justify how they allocate and spend their ad dollars.

Proving the connection between online ads and store visits is also crucial to Google, which is increasingly competing with social channels like Facebook for ad budgets.

Helping businesses “close the loop” could be one of the best ways for online ad giants to differentiate themselves and in an effort to do this, Google has released a new best practice guide aimed at helping advertisers drive store sales using AdWords.