Will Local Deals Make Nextdoor Feel Less “Organic”?

Lots of attention is being paid today to Nextdoor’s announcement that it’s rolling out a new ad platform for local businesses called Local Deals. The new platform offers a way to “hyper-target” the millions of consumers who are on Nextdoor.

According to the press release announcing Local Deals, “90% of consumers make the majority of their purchases within 15 minutes of their home.” So leveraging the hyper-targeting of the Nextdoor platform can offer local businesses a very needed option of local advertising and promotion and makes a lot of sense from a monetization perspective. 

Not to date myself (though, of course, I am), but I have vivid memories of sitting in meetings with many of the early online directory companies product people arguing that local businesses needed hyper-targeting. In those days, the online directory companies often could only offer local businesses ad propositions covering an entire city. The owner of the dry cleaner would never really benefit from that ad proposition because they knew that the majority of their customers came from within a small radius of their store, so most of the ad coverage was wasted. 

Nextdoor’s Local Deals platform appears to solve this — only 20 years later. With a platform configured with 248,000 neighborhoods, Nextdoor can offer local businesses a way to reach potential customers who are around the block, not across town. 

Think of the Local Deals product as the marrying of hyper-targeted advertising with local word of mouth. In its press release, Nextdoor cited two restaurants as having good success with the Local Deals product. A third test customer — a YMCA in North Carolina — commented on how much more efficient Local Deals was when compared with direct mail. 

Businesses that want to leverage the product have to set up their free Business Page on Nextdoor. This requires businesses to claim their listings. The Local Deals ads will appear in a variety of places on the site including in a member’s local feed, in the Business Pages and Business section. Importantly, when a member uses the search box to find a dry cleaner, the Local Deals add will appear there as well. 

One of the things I like about Nextdoor is the organic nature of my local feed. You know the post by the neighbor whose dog is missing, or the other neighbor who wants to know who was playing music late into the night. So my question is, will the introduction of Local Deals make the stream feel more commercial and less organic?

This is the challenge Nextdoor faces — finding a way to insinuate a compelling business model into a modern-day message board. After all, the company has raised nearly half a billion dollars from some of the most well-known VC brands — most recently a $170 million raise in September (also adding Silicon Valley legend Mary Meeker to its board).

While Nextdoor clearly has all the necessary ingredients — audience, local businesses, technology, coverage, capital, etc. — the real question is do they have them in the right proportions. Time will tell.

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