By day, brand strategist Tom Bernthal is the CEO of Kelton Global, but when he goes home to Westchester, California in the evening he’s just another busy suburbanite. When he wants to catch up with things like his neighbors’ dispute with an errant developer, he turns to Nextdoor, a six-year-old hyperlocal social network that’s quietly grown to include about 106,000 neighborhoods in the U.S.
If you haven’t heard of it, you’re not alone. Nextdoor functions like a Facebook-Twitter hybrid that is made up of private neighborhood groups. Only people who reside in a specific neighborhood can join a neighborhood group and only its members can view each other’s posts. To join the network, users have to sign in with their real names and verify their address. It takes 10 neighbors to start a group, and some groups include several hundred members. The company does not disclose its membership numbers, but some estimates have put the number at close to 10 million registered users. And it is growing fast.
This year, the San Francisco-based company has set its sites on international expansion, beginning in Europe with a launch in the Netherlands, and it is rolling out its first revenue-generating advertising products in the U.S. Nextdoor has been testing sponsored posts from a handful of unnamed advertisers this summer and will unveil its U.S. sponsorship and ad program in August, said company representative Danielle Styskal. One Nextdoor network in the town of Healdsburg, California, recently included paid posts by Personal Capital, an online financial planning company that is not exactly local; its closest office is 70 miles away in San Francisco.
Prakash Janakiraman, the co-founder and chief architect of Nextdoor, said the company has been "experimenting with local businesses, and also possibly with larger advertisers that have strong community outreach efforts." The key differentiator of its offering, he said, is its local, service-oriented functionality. "While most social media is about self-expression, our networks are mainly about utility," he said, which will be reflected in the way advertisers are incorporated into the social media platform.
The social network intends to grab a share of the growing pool of money earmarked for local marketing on digital platforms. Overall, local digital marketing in the U.S. and Canada is swelling, with revenue growing from $48 billion in 2015 to a projected $66 billion in 2016, according to market research firm Borrell Associates. And digital spending accounts for 42% of all local advertising, Borrell reports.
Nextdoor's hyperlocal ad content can potentially be more targeted than Facebook’s because it can aim at 100 to 300 people in a defined region. Facebook, in contrast, targets every account within a selected radius (circle) of an address, according to Facebook's website. That circle may incorporate more than one neighborhood. Mobile ads on Twitter and Facebook can aim at very specific locations, but include anyone within that vicinity. Nextdoor reaches only verified residents.
What type of content do you find on Nextdoor? Personal recommendations about area businesses, such as plumbers, gardeners and dentists, make up more than a quarter of the activity on the network, according to the company. Members also share tips and requests about lost pets, garage sales and used furniture for sale. And local police departments have partnered with the site to share information about crime and crime prevention.
Users claim that Nextdoor is more convenient and organized than creating a local group on Facebook. "It feels like a modern-day throwback," Bernthal said. "I can go door to door and ask people who they like as a handyman like in the old days. But now I can do it without leaving my home, and reach a broader geographic area, yet not so broad that it becomes irrelevant."
For brands, this can be fertile territory. A national survey by marketing researcher Lucid exclusively for Campaign US illustrated the power of a personal recommendation. Asked, "What is most likely to prompt you to try a neighborhood business for the first time?" the most frequent answer, at 27%, was "recommendation by a neighbor" followed closely, at 20%, by "promotions offered to locals only." In contrast, only 11 percent of the 300 respondents answered "advertising" and 8% said "a Yelp review.""
However, marketing strategists warn that any kind of advertising in Nextdoor communities will take some finesse. Clearly marked sponsored content would be one acceptable way for marketers to participate on Nextdoor, said Kelton Global’s Bernthal.
"Sure, it’s a good way to hypertarget your message to an engaged audience in an uncluttered environment," added Caitlin Neelon, senior communications strategist at Goodby Silverstein & Partners. But trust is a big factor. "This isn’t an anonymous Twitter handle or a curated Facebook feed, members are using their real names and addresses. So advertisers shouldn’t come across as outsiders and compromise people’s trust of the platform," she warned.
Along with locally owned businesses, "the nearby branch of a national chain could fit in with the right messaging," Neelon added. "For instance, a major grocery store could talk about local products it carries."
For brands aimed at younger consumers, the payoff might be even bigger. Interacting with neighbors and nearby retailers via an online social network "certainly taps into the zeitgeist of Millennials," said Susan Cantor, CEO of Red Peak brand consultancy. "They want to be grounded in a community and like to share opinions about products and brands. They also believe local businesses usually offer higher quality products and services. And they crave influence. In a small neighborhood group, their voice is more influential."
But, "How local is Nextdoor, really?" asked Sara Cummings, marketing director of Oliver’s Markets, which operates four grocery stores in Sonoma County, California. Oliver’s boasts of its local ownership and considers Nextdoor a techie middleman without real grassroots cred. "Nextdoor is [essentially] a national digital company that provides [the infrastructure] for all these networks around the US. At Oliver's, we care about the authenticity of being local, so a better fit for our marketing is an online network owned by local people and programs that give back to our community," she said.
Nextdoor's Styskal responded, "The neighborhoods on Nextdoor are created by neighbors, and the conversations are all about local community, so actually it is a very authentic way for our members to discover local businesses and services."