One of the next steps in digital advertising is tracking sales in physical stores link the precious data back to the online advertising platforms, and Google seems to be a pioneer on that.

Google has already been offering to select Google advertisers access to a potent new tool to track whether the ads they ran online led to a sale at a physical store in the U.S. According to Bloomberg, that insight came thanks in part to a stockpile of Mastercard transactions that Google paid for.

Of course, nor Google neither Mastercard have ever spoken in public about the arrangement.

According to the report, Google paid Mastercard "millions of dollars" for the data, and the companies discussed sharing a portion of the ad revenue. The deal gave Google an unprecedented asset for measuring retail spending, part of the search giant's strategy to fortify its primary business against onslaughts from Amazon.com Inc. and others.

But the deal, which has not been previously reported, could raise broader privacy concerns about how much consumer data technology companies like Google quietly absorb.

Google claims that its new ads tool called "Store Sales Measurement" uses a double-blind encryption technology that prevents both Google and its partners from viewing their respective users' personally identifiable information. The search and advertising giant also claims that it does not have access to any personal information from its partners' credit and debit cards, nor it shares any personal information with those partners.?

Through this program, Google can anonymously match these existing user profiles to purchases made in physical stores. As a result, Google knows that people clicked on ads and can now tell advertisers that this activity led to actual store sales.

It works like this: a person searches for a "lipstick" on Google, clicks on an ad, surfs the web but doesn't buy anything. Later, she walks into a store and buys red lipstick with her Mastercard. The advertiser who ran the ad is fed a report from Google, listing the sale along with other transactions in a column that reads "Offline Revenue" -- only if the web surfer is logged into a Google account online and made the purchase within 30 days of clicking the ad. The advertisers are given a bulk report with the percentage of shoppers who clicked or viewed an ad then made a relevant purchase.

For Google, the goal is to net more retail spending. Advertisers spend lavishly on Google to glean valuable insight into the link between digital ads a website visit or an online purchase. It's harder to tell how ads influence offline behavior. That's a particular frustration for companies marketing items like apparel or home goods, which people will often research online but walk into actual stores to buy.

Google is also offering its own a mobile payments service first called Google Wallet. Part of the original goal was to tie clicks on ads to purchases in physical stores. But adoption never took off, so Google began looking for allies.

Google has been also flagging for advertisers when someone who clicked an ad visits a physical store, using the Location History feature in Google Maps. Still, the advertiser didn't know if the shopper made a purchase.