How Does Nextdoor Make Money? The Nextdoor Business Model In A Nutshell

Nextdoor is a neighborhood social networking platform. Until 2016, Nextdoor operations were venture-funded. That is, there was no requirement for the company to generate revenue. Since that time, three distinct revenue channels have been developed: sponsored posts, neighborhood sponsorships, and local deals.

Origin Story

Nextdoor is a neighborhood social networking platform headquartered in San Francisco, California.

The company was co-founded by Nirav Tolia, Sarah Leary, Prakash Janakiraman, and David Weisen in 2008. Each recognized that building real-world connections with others was a fundamental human need. They also recognized that vibrant, connected, neighborhood communities were the best way to achieve this vision.

After twelve months of beta-testing, the service launched in 2011 and became an immediate success. Three years later, Nextdoor was being used by 15% of all neighborhoods across the United States.

Nextdoor now serves 276,000 global neighborhoods in 11 countries. To date, members have made over 52 million local business recommendations. Registered users can also choose to stay updated on local news, receive security alerts, and buy or sell household goods. Ultimately, however, the platform allows neighbors to get to know each other.

Nextdoor revenue generation

Until 2016, Nextdoor operations were venture-funded. That is, there was no requirement for the company to generate revenue.

Since that time, three distinct revenue channels have been developed. Let’s take a closer at them below.

Sponsored posts

Regional or national brands and businesses can advertise on Nextdoor using sponsored posts. In keeping with the Nextdoor philosophy, sponsored posts are only shown to users who live close to the business being advertised.

These posts appear in user feeds and also in neighborhood newsletters. The minimum monthly spend for this service is $25,000.

Neighborhood sponsorship

Businesses with smaller budgets can purchase a neighborhood sponsorship. This allows them to create automated ad placements and advertise to customers based on zip code. Businesses can also post messages, polls, and events and build relationships with their audience by taking direct queries.

Nextdoor then collects a fixed, monthly subscription fee based on the zip code(s) to be sponsored.

The service is also available to local real estate professionals, who can share local market trends and be a helpful resource for local homeowners. The company claims that 74% of members are homeowners and a quarter of all conversations concern real estate. As a result, real estate neighborhood sponsorships may be quite lucrative.

Local deals

Local deals were designed to enable businesses, individuals, and neighborhood sponsors the opportunity to share discounts and promotions.

Given their local nature, deals are shown to members in a 2-mile radius. This can later be extended to 10 miles if so desired.

Posting a local deal can be as inexpensive as $3. However, the average cost is $75. Cost depends on the number of Nextdoor members in a given area and how long the user wants to share their deal.

Key takeaways:

  • Nextdoor is a North American social media platform to connect people in neighborhoods. It was developed to enhance human connection and create vibrant communities.
  • Nextdoor charges businesses with large advertising budgets to feature in sponsored posts. The monthly ad spend for this service must be at least $25,000.
  • Nextdoor also offers those with a smaller budget the chance to advertise to consumers based on zip code. Ultra-local advertising is also offered for those who want to target a specific area of no more than 10 miles in radius.

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