Ad-Supported Enterprise Software

by mike on October 19, 2007

Why isn’t B2B or Enterprise Software free and ad-supported? Historially, there has been a number of reasons. First, the number of end users is likely to be smaller within the enterprise. Second, enterprise software is much more costly. You need to build the product, hire sales people and support the product. We’ll explore this further in another post. Third, some of your enterprise customers might take issue with you monetizing employee behaviors and potentially distracting workers on their watch. Data ownership and privacy are issues as well.

Nevertheless, could it work? Of course, and I’m anxious to see someone try. One such company using this business model is Texas-based SpiceWorks. The company has network monitoring software. The software is completely free and ad-supported. They are targeting the SMB marketplace, which is a great place to start because it’s a huge market and price sensitive. Last count, they have around 120,000 users. It’s no surprise the heavyweights are experimenting with this model as well. Microsoft has an ad-supported version of its Office Live service and Google the same with Google Apps.

All the arguments against why ad-supported software won’t work don’t hold up against the huge potential cost savings. Enterprise software is very expensive and typical large-scale contracts can cost millions (for a solution that probably doesn’t work, but that’s topic for another post). Consumers and enterprises are also more comfortable with online advertising nowadays. The freemium model is an obvious choice to start with. The enterprise is ripe is for innovation and new business models are just the starting point.

I’d love to hear thoughts on this topic and other companies experimenting with similar business models in the Enterprise Software arena. Feel free to contact me with ideas and feedback.

blog comments powered by Disqus

Previous post: Open LinkedIn – It’s coming … sort of

Next post: Amazon Web Services