• by Laurie Sullivan , Staff Writer @lauriesullivan, December 4, 2009

Citigroup Internet analyst Mark Mahaney describes himself as one of those people who publish lots of PDF reports full of crap. His opener at the MediaPost Search Insider Summit on Thursday received plenty of laughs, but was followed by 20 minutes of insightful commentary.

Mahaney talked about the recession's impact on Internet commerce, as well as travel, advertising and search spend and shared data on the influence on mobile search and shopping behavior of smartphones, which today make up about 20% of all mobile phones in consumer hands.

Mahaney told attendees the recession prompted the pickup in search, accelerating the online shift. The recession moved a larger than expected percentage of offline sales online. Consumers became more price-sensitive, and did more comparison shopping.

Once consumers ventured online, they realized some prices were less than for the same items found in the brick-and-mortar stores. This allowed retailers with physical stores to carry less inventory this holiday season, avoiding getting stuck with excess. He also reminded us that this year, Circuit City and Linens & Things, among others, met their demise.

In my recent Search Blog post titled "The Obsolescence of Brick-and-Mortar," I state that within five years, Web sites will replace brick-and-mortar stores. The remainder of the article talks about a shift for some items, not all.

Mahaney says U.S. online advertising will rise between 3% and 5% this year, and jump to between 15% to 20% in 2010. Search will be around that, too, next year. On average this year, Internet stocks rose 125%, such as Amazon, basically because they underperformed so much in 2008, according to Mahaney.

Overall, retail will likely come in flat this year. "Retail sales in 2010 should be up 15%, and I'm wondering if that number is too low," he said.

Mahaney pointed to Priceline as one of the most sophisticated buyers of online advertising. Booking.com, Priceline's European brand, does well, too.

(Just wanted to remind you here that many people pooh-poohed the thought of the travel industry moving bookings online. It didn't completely extinguish in-store travel agents, but they have become more difficult to find. Plus, airlines provide discounts for booking online.)

Mahaney also noted the opportunity in mobile search advertising, a trend also forecast by industry statistics: Google disclosed last quarter it saw about a 30% sequential increase in mobile searches. Mobile searches across the Internet are growing in the triple digits this year. It will take between two and three years, but queries per smartphone will surpass those on the PC.

Mahaney said that Fandango expects to sell 10% of tickets via mobile this year. A restaurant he covers says between 2% and 3% of reservations are being made on its iPhone app.

"I know you're getting tired of mobile, but don't get tired of it just as we hit the inflection point," Mahaney said. "There is a material impact starting to show up that will be beneficial. It won't cannibalize PC desktop search. It will have a material impact on basic search activity and on paid search and organic search opportunities."