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There's good news for Target's marketing team: when it comes to online buzz, Target is handily beating its larger rival, Wal-Mart.

That's according to online reputation monitoring firm Crimson Hexagon, which looked at what was being said about each retailer online between July 15 and September 3, 2009.

The firm found that online conversations about Target are 75% positive and focus primarily on the Target shopping experience. Wal-Mart, on the other hand, doesn't get much love on the internet. Online conversations about the retail giant are 61% negative and focus primarily on Wal-Mart's business practices.

This probably isn't news to anyone, especially in light of the tough time Wal-Mart had last week. A photo site painting Wal-Mart shoppers in the worst light possible went viral and a 61 year-old man was arrested after slapping a crying child at a Wal-Mart store.

But an analysis of online conversations only provides one side of the story. As of March of this year, same-store sales at Target had decreased for eight months straight. At Wal-Mart, they had grown for 22 months straight. In 2008, Target's annual profits dropped a whopping 22.3%. As Time Magazine wrote at the time, "Target is getting trounced".

Things appear to be looking up for Target; August sales were better than expected. But a recent BusinessWeek article came to the same conclusion: "Wal-Mart clearly won out in the past year". The reasons are obvious: as bad a rap as Wal-Mart gets, it has been served well by low prices and an ability to meet customer demand.

There's no doubt that the rivalry between Wal-Mart and Target will only heat up once a recovery arrives. But there's an interesting lesson here: looking solely at Crimson Hexagon's findings, one might conclude that Target is in a much stronger position than it really is.

This is not to dismiss Crimson Hexagon's data. Online reputation monitoring can be an extremely powerful tool for companies. Going forward, companies that don't pay attention to what is being said online will likely miss out on key insights and actionable business intelligence. Online buzz can also serve as a canary in the coal mine.

But nobody should make the mistake of assuming that online buzz is always well-correlated with the bottom line because in many cases, it isn't. In the case of Wal-Mart, it is clear that its value proposition and market positioning has been far more effective than Target's despite the public scorn that Wal-Mart is frequently the subject of.

The point here: At a time when brands are being beaten over the head with reminders that their online reputations are so important, in the final analysis, actions speak louder than words. What consumers do is still far more important that what consumers say.

Patricio Robles

Published 7 September, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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