NEWS ANALYSIS: Spiceworks' new CEO Jay Hallberg explains how his company is able to reach a usually diffuse community of IT professionals that few other marketers have been able to reach.
AUSTIN, Texas—"IT Pros are hard to reach," explained Jay Hallberg as we talked in the press room of the SpiceWorld conference here. Hallberg was answering my questions about how a company such as Spiceworks, which gives its products away for free, manages to stay in business.
It's the elusive nature of the IT professionals who manage data centers, help desks and application development teams that makes Spiceworks' user community so valuable to potential advertisers and marketing partners.
"It's the same model as Google," he said, "It's all about the advertising." But, of course, there are differences. Spiceworks doesn't offer a search service, and in reality, there's a lot more involved than just advertising. Still, ads play an important role in helping Spiceworks grow and make a profit for its owners.
Those ads show up in the Spiceworks products. When an IT worker uses the Spiceworks console, there will be ads somewhere on the screen. Those ads may be for data center hardware or software, or they may be for products that integrate with the free products from Spiceworks.
The Spiceworks users I spoke with don't seem to mind the ads, considering them a fair trade-off for getting the free software. The fact that the software is advertising-supported is disclosed well in advance of anyone installing or using the Spiceworks software.
Notably, the applications being run or those being served in the cloud are context-aware, so the ads being served with them may be related to the function at hand. "But sometimes," Hallberg said, "we'll just decide that it's time to run an HP ad for everyone."
Spiceworks doesn't necessarily run ads in all of its applications. Hallberg said that in some cases, such as with the Spiceworks Network Monitor, there will be few, if any, ads because that application is meant to run in the background, and as a result, an ad would be pointless.
However, the ads aren't the only part of the Spiceworks business plan. Another big part is the Spiceworks community, which is sort of a hybrid user group and social network of people who either use or are interested in the Spiceworks products. The Spiceworks community also includes its business partners, which are other companies that make products that integrate with Spiceworks.
Partners take an active role in the various discussion forums that the company maintains, as do many of Spiceworks' more enthusiastic users. This allows companies that are trying to find a way to use the Spiceworks software to communicate with other users who have tried the same things. The partners may offer help, frequently for free. Other times, Spiceworks community managers will put users who need help in touch with other users or with vendors who can help out.
The community help has been somewhat formalized with the introduction of the Spiceworks concierge
service and a group of employees called SpiceAgents.
All of this user activity is tracked by Spiceworks, and it's used in a variety of ways, which includes sharing with partners and in targeting ads.