Google Maps is ramping up advertising in the app, and already has brands including Dunkin' and Walgreens buying in

• Google is ramping up its pitch for ads in Google Maps to capitalize on the growth of people searching for things while in the app.
• Google expanded its ads, called Local Campaigns, to advertisers last November.
• Dunkin' and Walgreens said they're putting a bigger emphasis on these ads, with promising results.
• However, some say it's hard to connect the dots between the ads and business results.
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Google is stepping up its advertising pitch for Google Maps, which now has 1 million people using it worldwide.

Google rolled out an ad format called Local Campaigns in 2018 as a way to drive foot traffic by serving people ads for local businesses while they use the navigation app. Now, these ads pop up along the user's route. It also expanded "local actions," which lets users call businesses from the app.

"Google Maps has huge potential," said Gareth Cleevely, senior director at ad agency iProspect. "It's still early days and the platform is in its infancy, but it's going to blow up."

Google has been steadily investing in Google Maps

Business Insider has spotted a number of brands running ads on Google Maps in recent months, including Dunkin', McDonald's and Walgreens. A user might also get an ad for a shoe store when they search for shoes in the app.

The way it works is that Google's algorithm serves people ads using their IP addresses, device locations and search terms. There are promoted pins, or branded waypoints, that show up whether someone searched for it or not, and Business Profile Ads, which are listing-type ads.

Advertising is a way for Google to capitalize on the growth in people searching while using Google Maps. Search interest in "local" and "near me" inquiries increasing by 350 times since the app launched 15 years ago, according to Google Ads Global Product Director Kim Spalding. Google's Waze, another navigation app, has run ads for years.

According to Google's own case studies, Local Campaigns helped brands drive a median fivefold extra return on ad spending.

Brands like Dunkin' and Walgreens said their Google Maps ads are exceeding benchmarks

Business Insider talked to two advertisers, Dunkin' and Walgreens, who said Local Campaigns has been a growing priority and that they have seen promising results from ads on Google Maps.

Walgreens began testing offers for sunscreen and the targeted ads led to two times more conversions to store visits versus its standard benchmarks, said Luke Kigel, VP of media and omnichannel planning at Walgreens.

Kigel said that advertisers want the ability to show ads that are personalized based on people's location and need.

Dunkin' used Google Maps to promote a new espresso drink and saw store visits increase 11% with the ads versus its average performance across all digital channels, said Joslin Higgins, senior manager of media at Dunkin'.

"The scale is tremendous, and we're increasing our investment by double digits," she said.

It's easy for advertisers to repurpose existing social media assets and coupons for Google Maps ads and run them across other parts of Google's ecosystem like search, YouTube, and its Display Network, said Julia Clark, director of paid search at digital agency Jellyfish.

"It's a great way in for those that don't have the budgets to spend directly on places like YouTube," she said.

But measuring returns remains a challenge

Google already dominates search advertising, but as competition intensifies, it has expanded beyond text-based search to voice, visual and now local and navigation-based search. It stands to benefit from local advertising growth that is expected to surpass $161 billion in 2020.

Google Maps revenue is estimated to reach $4.86 billion in 2020 and more than $11 billion by 2023, according to a recent note by Morgan Stanley analyst Brian Nowack. He attributed this to new travel products and augmented reality features.

But it's hard to tie these local ads to foot traffic and store sales, pointed out iProspect's Cleevely. And internal politics can make them tricky to buy because marketers often have different teams handling digital advertising and tracking offline advertising and store traffic.

"It's a black box when it comes to reporting results," said Cleevely.