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Prof. Kirthi Kalyanam poses in front of Whole Foods merchandise

Prof. Kirthi Kalyanam poses in front of Whole Foods merchandise

In-Store Pick-Me-Up

Research by marketing Professor Kirthi Kalyanam helped big-box stores find a new trick to stay competitive.

If you’re a fan of shopping online and then picking up your items in the store, stop by and thank Santa Clara University professor of marketing Kirthi Kalyanam.

Research by Kalyanam and four co-authors was key to proving, way back in 2013, that digital search advertising is a tactic that can benefit retailers not just online, but enterprise-wide. That revelation—proven in an award-winning and exceptionally rigorous study—helped contribute to the current proliferation of buy-online, pick-up-in-store (BOPIS) retail strategies, among other retailing innovations. Most importantly, it helped brick-and-mortar stores find a profitable way to compete in e-commerce.

“Brick-and-mortar stores desperately wanted to do e-commerce, but they wanted to do it in a way that played to their advantage and was profitable,” said Kalyanam. “They didn’t know what that sweet spot was,” he added.

Kalyanam and his team conducted the research from 2012 to 2013—the elementary school years of omni-channel e-commerce—showing that retailers would benefit far more than expected if they invested in digital search advertising. At the time, it was pretty easy to show that retailers who used digital ads for sweaters were succeeding in getting customers to buy those sweaters online.

What was far harder to show was that retailers who invested in digital advertising were also benefiting their “overall enterprise,” meaning customers were shopping more with them both online and in their stores. To do that sort of study, researchers had to conduct careful field experiments that isolated the enterprise-sales effect.

That is where Kalyanam and his team succeeded.

With clinical-trial-level rigor and analysis (thanks to having two biostatisticians on the team), they studied the effects of digital advertising across channels for 15 major retailers. The study was so reliable that major retailers began adding significant resources to the online-to-in-store sales model connection.

But back in 2013, it wasn’t so clear. Retailers weren’t ready to commit to heavy digital-advertising models for the benefit of the enterprise.

“We had a lot of explaining to do to a lot of people, to show why this was so important,” said Kalyanam.

The study, Cross channel effects of search engine advertising on brick & mortar retail sales, was conducted by Kalyanam; John McAteer, a vice president at Google; Jonathan Marek of Predictive Technologies; as well as clinical researchers from the world of biostatistics— James Hodges and Lifeng Lin from the division of biostatistics at the University of Minnesota.

Their paper recently won what could be considered the Academy Award for marketing papers: the Dick Wittink Award for being among the best papers published in Quantitative Marketing and Economics Journal in 2019.

Prof. Kalyanam’s work “offers credible and generalizable insights that are valuable to both industry practitioners and academics,” said Quantitative Marketing and Economics editor Gunter Hitsch. “A similar focus on generalizability or external validity is very rare in the literature,” he added.

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Prof. Kirthi Kalyanam