Month: February 2020

Nextdoor hasn’t been a top of mind for media buyers within agencies thus far amid a slew of competition from established online platforms and newer ones like TikTok. Three buyers at different agencies told Digiday it had been a while since they had last heard from the company. One senior executive at a U.S.-based agency said the last time someone from Nextdoor contacted them was 2018 — and that person has now left Nextdoor.

“In the U.S., we for sure have not spent really any time with agencies in the last 18 months, probably 24 months,” said Nextdoor CEO Sarah Friar. “Because we built out a direct salesforce, we were having a lot of success going directly to the brands themselves — we had not thought we were frankly at the scale enough for an agency to really take notice.”

Nextdoor is now in a better position, she said. The company doesn’t release its user numbers, but Friar said there are around 260,000 neighborhoods in total, which vary in size between a couple of hundred users up to a couple of thousand. The Nextdoor.com website notched up 29.5 million global visitors in Dec. 2019, up 29% on Dec. 2018, according to measurement company Comscore. The app pulled in 14.8 million uniques in Dec. 2019 per Comscore data.

Last May, Nextdoor raised a $123 million funding round at a 2.2 billion valuation, which brought its total investment up to more than $400 million. The company employs around 400 people — a headcount that has doubled in size since Friar joined the company in December 2018. Nextdoor declined to comment on its revenue figures.

Nextdoor currently offers display and video ads that appear in the newsfeed, email digest ads and “classified ads. The minimum spending commitment for national brands is $25,000 per month. The next ad format to launch will be a carousel-type format. It also offers an ad network called Neighborhood that lets advertisers reach the Nextdoor audience on third-party sites, though looking ahead to the end of third-party cookies, Friar described this more as a “nice to have than a need to have.”

Under the hood, the biggest investment Nextdoor is making in the coming months will be on improving its data-management platform, which allows marketers to overlay their customer-relationship management databases to target lookalike audiences. Nextdoor also wants to help advertisers target highly sought-after segments like “new movers” or “new moms.” Around 60% of Nextdoor’s users are female and 74% are homeowners, Friar said.

The self-serve platform is also another key area of investment, though rather than build it in-house — as with the DMP — Friar said Nextdoor would look to partner with or buy the required tech in order to get it off the ground.

Nextdoor is also beefing up its own marketing. Earlier this month, Nextdoor hired former Hyatt Hotels CMO Maryam Banikarim to lead its marketing. Friar said Banikarim is charged with elevating the Nextdoor brand and focusing on its association with authenticity, kindness and community on the web — three areas that will be at the “epicenter of the biggest trend in the world” over the next decade, according to Friar. Banikarim will also be tasked with supporting Nextdoor’s international growth.

Last year, Nextdoor made three acquisitions, including Hoodline, a San Francisco-based hyperlocal news and information company. While Hoodline mostly auto-generates news content at the moment — local sports scores, new restaurant openings, or major weather events — Friar envisages Nextdoor offering more editorial further down the line.

“The problem of local news is that the business model is broken,” said Friar. “But for us, the business model is very much in place: Great news drives great engagement; great engagement drives great impressions; great impressions means we have a business model in advertising; great advertising brings utility … and benefits for members, so that’s the flywheel approach.”

Still, Nextdoor faces a challenge in going up against the likes of dominant players Google and Facebook for ad budgets, the latter of which also offers users local neighborhood groups and a marketplace to buy and sell goods. Friar said Nextdoor’s points of differentiation include its local focus; the fact that its audience is a base of logged-in, verified users (who use their real names and addresses); and the work it has done to promote a positive tone on the platform. Since introducing its “kindness reminders” — prompts aiming to slow users down if looks like they’re about to write something mean — 25% to 35% of posts get edited, Friar said.

Friar says she often offers this explanation when pitching advertisers: “Instagram is where you get inspired to do it — Pinterest is there too — but Nextdoor is where you get it done … and Facebook is where you go to brag about it.”

Kieley Taylor, global vp for social at GroupM, said in an email that Nextdoor is an appealing ad-buy given its core focus on hyper local communities and the potential for making deep connections between neighbors and local businesses. But, she added, the “proof will be in the pudding” as Nextdoor continues to grow its ad offering beyond reserve inventory.

“Growing pains others have stumbled on include balanced ad load, brand safety, scaled inventory, pricing rationale, user access and security of the buying system, etc.,” Taylor said. “Luckily, the playbook to overcome these challenges has been established by many others who’ve proceeded them in self-serve and catering to SMB and enterprise business[es] alike.”

Google’s solution to third-party cookies is its Privacy Sandbox, which is a series of proposals that could move a large portion of the authorization, measurement and insights on ads to the browser. This could, in turn, create a dependency on the browser-as-platform, which doesn’t sit well with some advertisers.

“In the absence of those cookies, we must create new proxies for measurement,” said the chief media officer at a consumer goods advertiser.

In other words, fewer cookies mean less tracking data, which ultimately causes havoc with the measurement of online ad campaigns. Without information about a person’s behavior provided by a consistent identifier from a third-party cookie, post-view conversions will be treated as isolated events, for example. So, marketers not only lose the single consumer view they’ve been trying to build over the last decade but will also be unable to deliver highly targeted ads across sites and devices.

“The ad industry did ourselves a disservice when it said all media would be measurable and we’d be able to unify our investments to an individual,” said a senior media buyer who wasn’t authorized to talk to Digiday. “We didn’t take into account what consumers were going to be comfortable with and didn’t think the walled gardens would never allow advertisers to understand their users at a granular level.”

Boxed in by this conundrum, advertisers look set to put off their most difficult decisions until later this year as they try to rationalize whether they actually need the third-party data signals they’ve become so reliant on.

Instead, advertisers are trying to augment their current attribution strategies and solutions with their current providers, which in turn is pushing those businesses to think harder about what they do in the future, said Omar Amath, a strategist at digital agency Agenda32.

In turn, advertisers are starting to think about how they use their own first-party data for brand building campaigns online, which is something only a handful of advertisers to date, said Direct Line Group’s head of group commercial marketing, Sam Taylor at ISBA’s annual conference in London yesterday.

“In most of the cases where we use our data in our advertising, it’s done at the top of the funnel of our marketing funnel, rather than at the bottom of it,” said Taylor. “It’s not necessarily about the cheapest possible conversions. It’s more about how we can use the data to reduce wastage, which is an entirely different way of looking at it.”

Meanwhile, other advertisers are gearing up to test attention metrics like viewable cost-per-thousand impressions. Indeed, Mars, Microsoft, and Diageo joined The Attention Council earlier this month as a way to assess the quality of ad placements through the lens of attention and the proxies for it.

Attention metrics have grown in popularity in recent years as advertisers like Asics have grown wary of easily gamed metrics in favor of better proxies for media quality. This shift has been accelerated by pressure on outcome-based proxies like brand impact and attribution, created by regulation and the subsequent crackdown on third-party tracking in the most popular web browsers.

According to Joe Copeman, global svp sales at podcast platform Acast, all Acast’s publishing clients are eager to globally grow listeners.

“Everyone is asking how to increase reach in other markets and grow revenue from other countries, otherwise there’s a lot of waste out there,” he said. “It’s important for shows to appeal in different markets.”

In the U.K., 7.1 million people listen to podcasts each week, around 12.5% according to U.K. media regulator Ofcom, an increase of 24% over the past year. The U.K. ranks 20 in the countries that listened to a podcast last month, according to the Reuters Digital News Report. There’s room for growth but, despite the upsides of the format, this is slowed by common teething problems in digital media. Podcasting has been held back by problems like agreeing on standardized formats, common measurement, show discoverability and platform gatekeepers holding on to the data.

The U.S. makes up the largest chunk of listeners for the U.K. produced podcasts in Acast’s 10,000-strong network, he said. In the U.K. the BBC is the most prolific for producing podcasts and is very focussed on global reach, especially for the Indian and Australian markets. Partly this is because the BBC can’t monetize its content in the U.K.

Looking overseas for growth isn’t so surprising, and it’s a tactic that subscription publishers deploy. The global podcast market is buoyant: Industry leaders believe podcast advertising revenue will reach $ 1 billion this year, said Copeman, mostly that’s driven by the U.S. which is due to reach $1 billion in podcast revenue in 2021 according to the Interactive Advertising Bureau. Estimating global podcast ad revenue is murky when not all countries have started measuring specific podcast ad spend yet.

Podcast revenue comes from ads, sponsorship like host-read spots which ties the brand to the content and branded content which is even more integrated. The growing demand for ads that can be inserted and targeted at scale is suited to global growth. Podcasting has also attracted larger-scale brands outside of its early direct-to-consumer advertisers where campaigns were typically performance-based but rarely shipped overseas.

Copeman said a lot of demand is growing for ads used in more creative instances but still benefiting from audience targeting and scale.

Unlike radio, “you don’t have to compete for someone’s attention, you already have it. The ad doesn’t need to be crass, it can be more calm, personalized,” he added. “People have lazily been using radio creative and shoving it into podcasts.”

Here’s how other ad holding companies are taking precautions

• WPP’s travel policy: employees are restricted from traveling to China, Hong Kong, Singapore, South Korea, Japan or Italy and must work remotely for 14 days if they are returning from those areas.
• Yesterday morning, IPG sent out a memo detailing the company’s similar travel policy, which restricts travel to China and South Korea “until further notice” and requires employees who are returning from those countries (as well as Italy) to work from home for 14 days.
• Earlier this week, Omnicom shuttered its London office for 48 hours after a potential scare with the virus. Since then, the holding company updated its travel guidance postponing travel to China, Japan, Hong Kong, Iran, Singapore, South Korea, Thailand, Taiwan, or Northern Italy until further notice. Employees returning from those places have also been asked not to return to the Omnicom offices for 14 days.
• On Wednesday, after a case of coronavirus was confirmed, per The Drum, Dentsu Japan told employees to work remotely. The company has also restricted travel to affected countries and cities and told employees to work remotely. The company also released a statement: “We have a robust business continuity team who are working at global, regional and local level to safeguard our people and react in an expedited way, where required. We are continuously monitoring the situation, particularly regarding high risk markets and are adopting all local government recommendations.”
• At Havas, per an internal memo issued by CEO Yannick Bolloré, business travel to areas including South East Asia, Milan and Venice is suspended. Employees coming back from a business trip in those areas have to work from home for 14 days.
• Publicis Groupe has not released a business statement yet on the potential of coronavirus but has in the last week or so restricted travel at this time to China, South Korea and Italy. The company is also encouraging Skype and video conferencing where possible rather than travel.

All agency groups’ stocks have taken hits along with the broader market. WPP’s shares fell 15%; IPG is down 5%; Omnicom is down nearly 4%; Dentsu Aegis fell 2.5%; Publicis Groupe is also down 5.6%. Agency execs are looking to manage concerns about the virus while also managing business needs. Still, much is unknown about the long-term business impact of the virus.

“So I think the reason we were not specific was just because I think at the moment, it’s really just unknowable,” WPP CEO Mark Read, during the earnings call when asked about the business impact of coronavirus on WPP’s China business. “It’s more unknowable today than probably it was Friday, if we had this meeting Friday of last week, we may [have] given you a different answer then we give you today.”

Omnicome CEO John Wren also addressed the threat of coronavirus to the holding company’s business during Omnicom’s earnings call earlier this week, noting that the company’s events business in China will likely be affected due to cancelations. “With respect to China, we, like most other people, are playing it day-to-day at this point,” said Wren. Wren also noted that “China is an important market, but it’s not a terribly large market for us and our numbers.”