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Nextdoor maps 350,000 neighbourhoods to sell ads to businesses whose sales vary by location
Nextdoor has launched Neighborhood Intelligence, a map of 350,000 neighbourhoods that lets advertisers target ads by what locals are saying. It gives marketers with physical locations a finer way to split local budgets, though so far the case rests on the chief executive's word.
The Board Room · Leadership desk
What happened
- Chief executive Nirav Tolia is aiming the tool at businesses whose sales differ from site to site, naming car dealerships, solar panel companies and restaurant chains.
- Brands can see how each neighbourhood talks about them and tailor ads, so an internet provider could stress reliability in one area and fees in another.
- Advertisers can also look for lookalike neighbourhoods that resemble the communities where their products already sell well in stores.
- Targeting runs on Nextdoor's own platform first, and the company said the graph could eventually extend to advertising elsewhere on the web.
- Nextdoor, which earns most of its money from advertising, grew revenue 15% to $75m in the quarter to June and has around 110 million users.
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Why it matters
- decision Brands with uneven store-level sales can now buy sub-ZIP-code targeting from one platform, but with Pepsi's stated interest as the only named demand, any spend this quarter is a test.
- constraint Until Nextdoor carries the graph off its own platform, a marketer cannot apply its neighbourhood map to Meta or Google buys, so the precision is limited to Nextdoor's audience.
- precedent With Uber and DoorDash doing the same, ad platforms smaller than Meta and Google are making proprietary behaviour data their main pitch, and marketers will have more single-platform insight tools to evaluate.
- contradiction The publication that broke the launch calls the tool niche and doubts regular uptake, while Tolia says demand was never the problem; until campaign results appear, buyers are weighing one against the other.
Tolia's argument starts from what the large platforms already do well. He told Business Insider that Nextdoor's rivals have become extraordinarily sophisticated at finding users likely to buy products online [5]. A business with physical sites has a different problem. It does not necessarily want to spend its marketing evenly across every location, or even across a single ZIP code, Tolia said [7]. Targeting by local need, he said, is "not something Meta offers" [8].
The map is fine-grained. At roughly 12 neighbourhoods per ZIP code, it covers about 29,000 ZIP codes' worth of territory [18]. Tolia said social listening tools on Instagram, X or Reddit usually cannot pinpoint where a conversation is taking place [9]. Many consumer brands want sentiment grouped by geography, he said, because product preferences vary so much from place to place [9]. The claim that Meta, Google and Reddit cannot match this comes from Nextdoor itself, in a launch it gave exclusively to Business Insider's CMO Insider [1][16]. The publication disclosed that Axel Springer, parent of Insider Inc., is an investor in Nextdoor [15].
The objection to the product appeared in the same article. The graph "appears to be a fairly niche proposition," Business Insider wrote, a tool that "might struggle to attract enough advertisers to use it regularly" [20]. Tolia disagreed. "I really don't think demand is something that we feel is the missing piece here; the missing piece here was building it," he said. "We've been asked for it so many times." [21] The one advertiser he named was Pepsi, and he said only that it had expressed interest [22]. The article does not report pricing, signed customers or campaign results.
Nextdoor's ad business has shown momentum after years of struggling to keep up with larger rivals, according to Business Insider [17]. Revenue in the same quarter a year earlier works out to about $65m [19]. Citi analysts wrote in August that the company was gaining traction in home services, tech and telco, healthcare and financial services [12]. They credited better tools for performance advertisers and higher-priced formats such as video [12]. Home services and telco sit close to the solar installers and internet providers in Tolia's own pitch [6][3].
Other platforms have packaged their own user data the same way. Uber Ads launched Uber Intelligence last year, offering anonymised, aggregated data on users' journeys and takeout habits [13]. Last month DoorDash launched Brand Center, with data on what consumers buy and which products they substitute when an order is unavailable [14].
This quarter's choice for a marketing leader with uneven store-level sales is whether to fund a contained test on Nextdoor inventory. Next quarter's consequence depends on whether Nextdoor follows through on extending the graph to advertising elsewhere on the web [10]. If it does, a brand that has already measured neighbourhood-level results on Nextdoor will have a baseline for judging the data off-platform. If it does not, the targeting reaches only people who use Nextdoor [10].
What to watch
- Whether Nextdoor publishes pricing, or names advertisers beyond Pepsi actually running Neighborhood Intelligence campaigns.
- Any move to extend the neighbourhood graph to advertising outside Nextdoor's own platform.
- Nextdoor's next quarterly results, and whether revenue growth holds near the 15% reported for the quarter to June.