This Space for Rent

So far, only a few jurisdictions have accepted advertisements on their Web sites, but more will follow. Is the risk worth the reward?

by , / November 30, 2000 0
When you think iceberg, you don't think Honolulu. But Hawaii's capital is the tip of what could become a very large iceberg, indeed.

In June, the city tacked a banner ad for the Bank of Hawaii onto the Honolulu Web site, becoming one of the first jurisdictions to accept advertising on a government Web site.

Some public officials take a dim view of this emerging practice, but e-gov companies, of course, think it's the best thing since, well, e-gov companies.

CIO Courtney Harrington said Honolulu didn't set out to be a pioneer. The city/ county jurisdiction simply needed a way to pay for adding e-commerce functions to its Web site.

"We didn't stop and say, 'Nobody has ever done this before; maybe we shouldn't do it.' We said, 'Here's a revenue stream.' The fact is that the only way we can bring electronic services to [citizens] is to allow a small amount of advertising," said Harrington.

An Avalanche of Ads?

According to city officials, Salt Lake City, Utah, has released an RFP to overhaul its Web site. Part of that RFP contains a provision to accept online advertising as a funding mechanism for the overhaul.

Massachusetts' Com-PASS Web page contains one banner ad, but the advertising space is specifically targeted to vendors who sell to the state and state agencies. The state's Central Reprographics and the Office of Vehicle Management run ads on the Com-PASS Web page.

Iowa, Florida and Ohio want to post ads, and Iowa is very close to releasing an RFP to start the process.

Kansas is a bit more leery and has created a subcommittee to study the issue. Lisa Counts, director of marketing of the Information Network of Kansas, is the chair of the subcommittee examining the issue.

"We're trying to determine best practices, what hurdles other states are encountering and, generally, what's going on out there," said Counts. "We're trying to come to some sort of conclusion for our state agencies. Some of the agencies are big, but some are very small and don't have legal counsel or resources like that. They're looking for some guidance from the state."

While attempting to reach a consensus on just how large a role the state should play in crafting policy addressing online advertising, the committee is also debating issues, such as whether advertisements should appear on only the state's Web site or on individual state agency Web sites.

In addition, Kansas is looking at where the revenue would go: If the state's Department of Commerce and Housing decides to accept advertising, would that revenue go to the department or back to the state?

And what about large, out-of-state corporations advertising on the state's Web site? "That's a big issue," said Counts. "The Department of Commerce and Housing has told us, 'It's our job to promote [in-state companies], and we want to bring business to Kansas. If we publicize Microsoft, does that compete with our local companies?'"

Lt. Gov. Gary Sherrer, who also serves as the state's secretary of commerce, has concerns about the state accepting advertising on its Web site.

"Frankly, I don't think we need the revenue that badly," he said. "I believe there are a lot of pitfalls and, if we do something, I want it to be well thought-out. It's an issue that deserves a lot of attention, and this is one area where I don't want to be first or second or third."

Funding Blues

Iowa, on the other hand, needs the revenue, said Dan Combs, director of digital government. The state has released an RFP to solicit what he calls "Web-site sponsorship."

"We were given the charge by the Legislature this past year to look at other options for generating income from the state's portal," said Combs, adding that, due to a wrinkle in the Legislature's mandate, the only option that didn't require getting legislative approval was looking for some kind of sponsorship.

The decision to pursue online advertising is one of necessity for Iowa, said Combs, because the state doesn't have the budget surpluses that other states enjoy to fund e-gov strategies.

The lack of funding is also hitting local jurisdictions as they struggle to put services online in response to increased demands from their constituents.

"Economically, it's well worth experimenting with," said Steve Steinbrecher, CIO of Contra Costa County, Calif., the state's sixth largest county, adding that Web development, the roll out of Web applications and the maintenance of those applications are all extremely expensive.

"When you work in the arena that includes democracy, part of that process is everybody has to have an opportunity to submit input," he noted. "If I sit around and wait for the court system or a public vote on whether there should be advertising on the Web, I could be in real trouble. It goes back to this issue of the time involved. In Internet time, I can't wait six to 10 months to get an answer from somebody [who] says, 'Well, this may be OK and maybe it won't be OK.' I'm going to be on my third iteration of a Web site by then, and I need to have the income to drive the development and roll out."

One problem facing e-government services is the lack of a return on the investment to create those services. As the number of constituents expecting to take care of routine governmental transactions online goes up, governments have to scramble to keep pace with those expectations by debuting more and more government services on the Web. This situation forces IT directors to defend something that's hard to quantify.

"Right now, there isn't any ROI for Web expenditures," Steinbrecher noted. "How do you put an ROI value on public service? We're not like Amazon.com -- I can't say, 'Well, 450,000 people bought books here last month.' If we answer one question for one 85-year-old woman through our senior-service agency that makes her life easier, there's no ROI in that at all. But to that one individual human being, we provided her with an invaluable service."

Legalese

One of the fears racing through jurisdictions' minds is that a company denied the opportunity to advertise on a government Web site will claim First Amendment violations and haul the jurisdiction into court.

To forestall potential litigation, one of the first steps Iowa is taking is crafting its own set of standards to define what sorts of advertisements would appear on the Web site.

"I assume that there will be challenges to this and that somebody will come up with a lawsuit of some kind at some point, but we're attempting to take care of as much of that problem as we can," said Iowa's Combs, adding that, between the state's standards and the RFP winner's standards, the state should have a "double firewall" to protect against lawsuits.

Liza Lowery, CIO of San Francisco, said that the city is considering online advertising and has met with representatives from a vendor who specializes in advertising on a municipal site to fire off legal questions.

"As a government, we have a big problem saying that a church, the KKK, the Pink Poodle or other people can't advertise," she said. "If you take it from one, you really have to allow equal time for the other."

Kansas' Sherrer also has worries about the potential legal ramifications of online advertising, especially regarding implied endorsements and competitive issues.
income from the state's portal," said Combs, adding that, due to a wrinkle in the Legislature's mandate, the only option that didn't require getting legislative approval was looking for some kind of sponsorship.

The decision to pursue online advertising is one of necessity for Iowa, said Combs, because the state doesn't have the budget surpluses that other states enjoy to fund e-gov strategies.

The lack of funding is also hitting local jurisdictions as they struggle to put services online in response to increased demands from their constituents.

"Economically, it's well worth experimenting with," said Steve Steinbrecher, CIO of Contra Costa County, Calif., the state's sixth largest county, adding that Web development, the roll out of Web applications and the maintenance of those applications are all extremely expensive.

"When you work in the arena that includes democracy, part of that process is everybody has to have an opportunity to submit input," he noted. "If I sit around and wait for the court system or a public vote on whether there should be advertising on the Web, I could be in real trouble. It goes back to this issue of the time involved. In Internet time, I can't wait six to 10 months to get an answer from somebody [who] says, 'Well, this may be OK and maybe it won't be OK.' I'm going to be on my third iteration of a Web site by then, and I need to have the income to drive the development and roll out."

One problem facing e-government services is the lack of a return on the investment to create those services. As the number of constituents expecting to take care of routine governmental transactions online goes up, governments have to scramble to keep pace with those expectations by debuting more and more government services on the Web. This situation forces IT directors to defend something that's hard to quantify.

"Right now, there isn't any ROI for Web expenditures," Steinbrecher noted. "How do you put an ROI value on public service? We're not like Amazon.com -- I can't say, 'Well, 450,000 people bought books here last month.' If we answer one question for one 85-year-old woman through our senior-service agency that makes her life easier, there's no ROI in that at all. But to that one individual human being, we provided her with an invaluable service."

Legalese

One of the fears racing through jurisdictions' minds is that a company denied the opportunity to advertise on a government Web site will claim First Amendment violations and haul the jurisdiction into court.

To forestall potential litigation, one of the first steps Iowa is taking is crafting its own set of standards to define what sorts of advertisements would appear on the Web site.

"I assume that there will be challenges to this and that somebody will come up with a lawsuit of some kind at some point, but we're attempting to take care of as much of that problem as we can," said Iowa's Combs, adding that, between the state's standards and the RFP winner's standards, the state should have a "double firewall" to protect against lawsuits.

Liza Lowery, CIO of San Francisco, said that the city is considering online advertising and has met with representatives from a vendor who specializes in advertising on a municipal site to fire off legal questions.

"As a government, we have a big problem saying that a church, the KKK, the Pink Poodle or other people can't advertise," she said. "If you take it from one, you really have to allow equal time for the other."

Kansas' Sherrer also has worries about the potential legal ramifications of online advertising, especially regarding implied endorsements and competitive issues.

"If I'm the Happy Dale Nursing Home and I'm all over the Department of Aging Web site, is there an implied endorsement, even though in small letters at the bottom there may be language to the contrary?" wondered Sherrer. "If I'm an insurance company that wants on the Department of Revenue's Web site that pertains to information about driver's licenses -- who gets on that site? The big company that outbids the small company? The out-of-state [company] that paid a bigger fee than the Kansas company that wanted on the Web site?"

Getting the Green Light

Although state and local officials have trepidations about accepting advertising on municipal Web sites, they aren't letting those apprehensions stop them.

San Francisco's Lowery said the city would be running a pilot program testing online advertising very soon, especially after seeing a presentation by govAds.

"It was clear to us that [the company] had thought through the issues, had talked to government, understood balancing sponsorships and advertising with all the problems that could create, and understood the legal implications and the legal issues," she said. "They showed us samples of what they're doing in Hawaii, and they were tasteful. It wasn't ... banner ads and click-throughs all over the screen. They serve up the advertising. They make the decisions in terms of not allowing alcohol, tobacco or things like that. It really isn't government getting into any First Amendment problems."

Contra Costa County's Steinbrecher is surveying county residents to find out what they think about online advertising and has run across a variety of opinions. Residents have told him they think it's very progressive of the county to seek alternative funding for e-gov services, but have also expressed worries about who gets to advertise.

"More people have a tendency to look at this whole issue of freedom of advertising -- what gets advertised, content and all those things -- on a very personal level," said Steinbrecher. "That's what's going to make this such a tricky issue.

"A lot of us as CIOs are skeptical of this right now," he continued. "Quite frankly, my CEO, who is a very progressive businessperson, understands the economics of it, but I think he's got that same skepticism. Because we know as soon as we start trying this, we're probably going to get burned. We're cruising into new territory here in the dark with a bag over our head. We've been talking about this for more than 18 months, and we're going to do it."


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By Shane Peterson, News Editor
Steve Towns, features editor, contributed to this story.