One software vendor’s media model

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Spiceworks is a software company with a free systems management suite for small and midsize businesses (SMBs). But instead of charging for its namesake software product, Spiceworks makes money like a media company, charging other technology companies that want to interact with its users—a highly targeted community of IT professionals—for purposes from market research to product design.

Software is turning out to be a promising online advertising opportunity because IT pros spend so much time at the computer screen. The average session length on Spiceworks is more than 30 minutes, said Jay Hallberg, co-founder and VP-marketing at the Austin, Texas-based company. “They’re in there for a long time.”

Those customers can see a lot of ads in 30 minutes, so Spiceworks serves up Google AdSense and targeted advertising from its corporate accounts. The company collects detailed information about user demographics—although not the details of their internal networks—that it uses to target advertising. Its customer base tripled to 72 vendors last year.

Marketers have many options for reaching Spiceworks’ coveted community of small-business IT pros. Sponsors can buy space right in the console that customers use to manage their networks, host branded forums in busy online discussion areas and even write custom plug-ins that add functions to the software suite.

That’s the approach LiveOffice is taking. The developer of e-mail archiving software has been buying banners on Spiceworks for more than a year and is now branching out to launch a widget that gives users of its free-trial download a gauge to monitor e-mail usage from the management console. “Spiceworks users are right within our sweet spot,” said Dean Nicolls, VP-marketing and product management at LiveOffice.

New advertiser Seagate Technology has been impressed by the way Spiceworks customers have responded to a new Seagate-branded community. “We’ve noticed that members are very active and open.” said Mark Wojtasiak, VP-marketing. “It’s been great.”

A social network enables members to swap tips and tricks, product reviews and tutorials within a Spiceworks-branded space or sponsored forums. Spiceworks Community has amassed a base of nearly 700,000 members, with 1,000 more joining each day.

As the community grows, so does the value to both members and marketers. Members have posted more than 15,000 product reviews and created hundreds of discussion groups. They also actively participate in Spiceworks product design by proposing and voting on new features. More than 400 members recently banded together into a backup software buyer’s group. They collaborated on a joint request-for-quotation document and challenged vendors to compete for their collective business. Vendors scrambled to respond.

It turns out that community is very good business. Spiceworks will host five regional user group meetings this year, collecting registration and sponsorship fees at each. A burgeoning white paper and webcast business adds lead-generation appeal. Marketers seem to like the idea of advertising in a mission-critical IT environment. “What they’ve put together is extremely powerful,” said Seagate’s Wojtasiak.

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