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.
Spicework’s Large User Community Serves as Important Business Asset
However, the company also takes advantage of this wealth of user data to plan new products and recruit new partners who can become part of the Spiceworks community and advertiser base.
What Spiceworks has managed to accomplish is to open a door to an elusive market—IT professionals who are generally hard to reach. “They don’t have time to talk to salesmen,” Hallberg said. “They don’t have time for long phone calls or to read a lot of emails.”
These IT workers are often overwhelmed by their responsibilities, and their departments are frequently understaffed and underfunded. Spiceworks can reach these people because they offer them something that nobody else can, which is high-quality software to help them manage their IT systems, for free.
“IT pros need to be able to find out what products are good,” Hallberg said. The community provides that information, and it provides access to vendors who have developed a level of trust in the community.
Because of trust that develops within the community, Spiceworks and its partners have access to a group of people that need their help and expertise. The user community, in turn, has access to partners that have built a level of trust around the products and services they provide.
Now that the company has become a trusted partner to a broad group of IT professionals across an unusually wide selection of industries, Hallberg’s biggest challenge is to find new ways to serve that elusive audience without alienating them. This is an area where it would be easy to push just a little too hard and find that once-loyal users have suddenly moved on.
Right now, Hallberg and his team are working to decide what new services Spiceworks can offer that will provide utility to its customers while also offering an opening into their needs and access to their partners.
To some extent, Spiceworks is doing this by adding functionality to existing products. But here again, the company must tread carefully so that the added functionality does not also cut existing partners out of the deal.
Ultimately, however, it’s about the data, which can be about the types of management issues users face, the products they work with or how they go about solving problems.
According to Hallberg, the data is aggregated so that no individual data is shared, but the company does share the aggregated data in a variety of ways.
Spiceworks already produces a “State of IT” report every year using that data. Hallberg said that the company is also able to crowdsource details about such things as Windows 10 adoption or which Windows updates are really crucial.
This kind of information is key to Spiceworks’ partners, and it adds value to advertisers, Hallberg said. But because of the fine line that Spiceworks must walk between serving its community and possibly alienating it, the company must tread carefully.