I've always just done this with my dogs favorite toy, for Hope it's a tennis ball..
I start very small, in one room, hiding it where it's not really hidden but she didn't see how it left my hand, might be just under a sofa cushion beside me.. I just show my empty hands and she starts looking, I just start real small and then throw a party when she finds it.
Then working up distance and visibility going from in sight to hidden under/behind/in something and from floor to higher places, leaving less and less of a scent trail (rubbing it around where I hide it or dragging a trail to it from many to just a a few feet away) and I up the stakes until eventually, like in Hope's case, she'll stay in one place until I hide it somewhere in the house, (I have to go to every room, leave a few false trails, a few scent spots, and leave it in some spot while I got to every single room) then I release her and she'll search for a half hour or more to find it.. and there's nowhere I can hide it now that she can get to that she won't find it. She loves the game and would play it all day.. I have also noticed it has made her much better at tracking things outside like squirrels and such too.
I have done it with food bits too for dogs like Kaya who isn't very toy motivated and even did a little of that with Hope. The trick is not making it harder too fast so that they give up and decide it's not worth looking, the more they succeed the more they will enjoy a little more challenge and eventually you can make it very difficult.
