Nextdoor’s ‘Local Deals’ ads let SMBs target specific neighborhoods

Nextdoor is launching a new ad product called “Local Deals.” While the company has shown ads from local businesses for some time those have come largely through partners; this is the first broad-based self-service offering for small businesses (SMBs) on the site.

Simple ad creation. In order to set up a Local Deal, SMBs need to create free Business Page. They are then guided through the simple ad-creation process in a wizard. They choose a radius from a business location using a slider and adjust to reach or opt-out of specific neighborhoods. They pick an expiration time frame (e.g., 14 days), create a redemption code, upload images from their phones/computers or provided stock images, enter payment credentials and publish.

Pricing right now is fixed (impression-based) and depends on the number of neighborhoods targeted and the population density of those areas. There’s no bidding and competition doesn’t impact pricing, according to Nextdoor’s Head of Product, Tatyana Mamut. 

Search and display. Local Deals will appear in several places on Nextdoor: in residents’ feeds, on Business Pages, in the Business section and in search results. There’s also a Local Deals area on the site that displays all deals in a consumer’s area (see graphic below).

There are two buttons for consumers to engage with: save and redeem. Redemption can be online or in-store. Nextdoor is tracking and reporting these actions by consumers. Currently, it’s not tracking offline store visits, although a possibility for the future.

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Mamut told me that Local Deals was created to respond to a common request from local business owners, “The ability to communicate directly with their neighbors.” 

According to Nextdoor data, there are 40 million neighbor recommendations on the site and “76% of members [have] been influenced by a neighbor’s suggestion on Nextdoor.” Indeed, asking for and recommending local businesses and service providers is a very common activity on Nextdoor.

I asked Mamut about user search behavior; Nextdoor has recently started putting sponsored listings in search results. She said that consumers display a range of behaviors on the site: engaging with their feeds, browsing and searching. She added, “Members go to the search box when there’s immediacy involved.”

What’s very interesting here, because of the multiple placements for Local Deals, is that it winds up being both a paid search and display ad product in one. It’s available today in the U.S. and will be rolling out to other geographies in the near future.

Why we should care. As I previously wrote, Nextdoor is one of the few really interesting consumer offerings going on in local right now. The company operates in 248,000 neighborhoods and 11 countries. It’s heading for an inevitable IPO unless a larger entity tries to buy it before it gets there.

Nextdoor is also in a position to be disruptive, to varying degrees, to Facebook, Google and Yelp from a local advertising standpoint. Google Ads are too complicated for many small businesses; Facebook never developed a culture of search behavior and many business owners are profoundly ambivalent about Yelp.

Nextdoor has a culture of local business recommendations and, increasingly, local search. It’s also highly trusted because its members are verified neighbors. It will be fascinating to see where the site goes from here and how it tries to further monetize its audience and traffic.