How Nextdoor is pitching advertisers

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Nextdoor, the neighborhood social network that lets members post appeals for lost pets and swap tips on plumbers, is planning on using a recent funding round to help it ramp up its pitch to advertisers this year.

Its plans include the launch of a self-serve advertising platform to help it appeal more to medium-sized advertisers, investment in a data-management platform in order to improve its targeting and the company is set to make a reinvigorated push with agencies.

Nextdoor hasn’t been a top of mind for media buyers within agencies thus far amid a slew of competition from established online platforms and newer ones like TikTok. Three buyers at different agencies told Digiday it had been a while since they had last heard from the company. One senior executive at a U.S.-based agency said the last time someone from Nextdoor contacted them was 2018 — and that person has now left Nextdoor.

“In the U.S., we for sure have not spent really any time with agencies in the last 18 months, probably 24 months,” said Nextdoor CEO Sarah Friar. “Because we built out a direct salesforce, we were having a lot of success going directly to the brands themselves — we had not thought we were frankly at the scale enough for an agency to really take notice.”

Nextdoor is now in a better position, she said. The company doesn’t release its user numbers, but Friar said there are around 260,000 neighborhoods in total, which vary in size between a couple of hundred users up to a couple of thousand. The Nextdoor.com website notched up 29.5 million global visitors in Dec. 2019, up 29% on Dec. 2018, according to measurement company Comscore. The app pulled in 14.8 million uniques in Dec. 2019 per Comscore data.

Last May, Nextdoor raised a $123 million funding round at a 2.2 billion valuation, which brought its total investment up to more than $400 million. The company employs around 400 people — a headcount that has doubled in size since Friar joined the company in December 2018. Nextdoor declined to comment on its revenue figures.

Nextdoor currently offers display and video ads that appear in the newsfeed, email digest ads and “classified ads. The minimum spending commitment for national brands is $25,000 per month. The next ad format to launch will be a carousel-type format. It also offers an ad network called Neighborhood that lets advertisers reach the Nextdoor audience on third-party sites, though looking ahead to the end of third-party cookies, Friar described this more as a “nice to have than a need to have.”

Under the hood, the biggest investment Nextdoor is making in the coming months will be on improving its data-management platform, which allows marketers to overlay their customer-relationship management databases to target lookalike audiences. Nextdoor also wants to help advertisers target highly sought-after segments like “new movers” or “new moms.” Around 60% of Nextdoor’s users are female and 74% are homeowners, Friar said.

The self-serve platform is also another key area of investment, though rather than build it in-house — as with the DMP — Friar said Nextdoor would look to partner with or buy the required tech in order to get it off the ground.

Nextdoor is also beefing up its own marketing. Earlier this month, Nextdoor hired former Hyatt Hotels CMO Maryam Banikarim to lead its marketing. Friar said Banikarim is charged with elevating the Nextdoor brand and focusing on its association with authenticity, kindness and community on the web — three areas that will be at the “epicenter of the biggest trend in the world” over the next decade, according to Friar. Banikarim will also be tasked with supporting Nextdoor’s international growth.

Last year, Nextdoor made three acquisitions, including Hoodline, a San Francisco-based hyperlocal news and information company. While Hoodline mostly auto-generates news content at the moment — local sports scores, new restaurant openings, or major weather events — Friar envisages Nextdoor offering more editorial further down the line.

“The problem of local news is that the business model is broken,” said Friar. “But for us, the business model is very much in place: Great news drives great engagement; great engagement drives great impressions; great impressions means we have a business model in advertising; great advertising brings utility … and benefits for members, so that’s the flywheel approach.”

Still, Nextdoor faces a challenge in going up against the likes of dominant players Google and Facebook for ad budgets, the latter of which also offers users local neighborhood groups and a marketplace to buy and sell goods. Friar said Nextdoor’s points of differentiation include its local focus; the fact that its audience is a base of logged-in, verified users (who use their real names and addresses); and the work it has done to promote a positive tone on the platform. Since introducing its “kindness reminders” — prompts aiming to slow users down if looks like they’re about to write something mean — 25% to 35% of posts get edited, Friar said.

Friar says she often offers this explanation when pitching advertisers: “Instagram is where you get inspired to do it — Pinterest is there too — but Nextdoor is where you get it done … and Facebook is where you go to brag about it.”

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Kieley Taylor, global vp for social at GroupM, said in an email that Nextdoor is an appealing ad-buy given its core focus on hyper local communities and the potential for making deep connections between neighbors and local businesses. But, she added, the “proof will be in the pudding” as Nextdoor continues to grow its ad offering beyond reserve inventory.

“Growing pains others have stumbled on include balanced ad load, brand safety, scaled inventory, pricing rationale, user access and security of the buying system, etc.,” Taylor said. “Luckily, the playbook to overcome these challenges has been established by many others who’ve proceeded them in self-serve and catering to SMB and enterprise business[es] alike.”

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