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 , / December 12, 2000
By Shane Peterson | News Editor

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

When you think iceberg, you dont think Honolulu. But Hawaiis 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 its the best thing since, well, e-gov companies.

CIO Courtney Harrington said Honolulu didnt 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 didnt stop and say, Nobody has ever done this before; maybe we shouldnt do it. We said, Heres 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 states 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.

"Were trying to determine best practices, what hurdles other states are encountering and, generally, whats going on out there," said Counts. "Were trying to come to some sort of conclusion for our state agencies. Some of the agencies are big, but some are very small and dont have legal counsel or resources like that. Theyre 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 states Web site or on individual state agency Web sites.

In addition, Kansas is looking at where the revenue would go: If the states 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 states Web site? "Thats a big issue," said Counts. "The Department of Commerce and Housing has told us, Its 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 states secretary of commerce, has concerns about the state accepting advertising on its Web site.

"Frankly, I dont 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. Its an issue that deserves a lot of attention, and this is one area where I dont 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 states portal," said Combs, adding that, due to a wrinkle in the Legislatures mandate, the only option that didnt 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 doesnt 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, its well worth experimenting with," said Steve Steinbrecher, CIO of Contra Costa County, Calif., the states 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 cant wait six to 10 months to get an answer from somebody [who] says, Well, this may be OK and maybe it wont be OK. Im 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 thats hard to quantify.

"Right now, there isnt any ROI for Web expenditures," Steinbrecher noted. "How do you put an ROI value on public service? Were not like -- I cant 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, theres no ROI in that at all. But to that one individual human being, we provided her with an invaluable service."


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 were attempting to take care of as much of that problem as we can," said Iowas Combs, adding that, between the states standards and the RFP winners 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 cant 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 Im the Happy Dale Nursing Home and Im 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 Im an insurance company that wants on the Department of Revenues Web site that pertains to information about drivers 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 arent letting those apprehensions stop them.

San Franciscos 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 theyre doing in Hawaii, and they were tasteful. It wasnt ... 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 isnt government getting into any First Amendment problems."

Contra Costa Countys 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 its 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. "Thats whats 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 hes got that same skepticism. Because we know as soon as we start trying this, were probably going to get burned. Were cruising into new territory here in the dark with a bag over our head. Weve been talking about this for more than 18 months, and were going to do it."

Steve Towns, features editor, contributed to this story.

Steve Towns

Steve Towns is the former editor of Government Technology, and former executive editor for e.Republic Inc., publisher of GOVERNING, Government TechnologyPublic CIO and Emergency Management magazines. He has more than 20 years of writing and editing experience at newspapers and magazines, including more than 15 years of covering technology in the state and local government market. Steve now serves as the Deputy Chief Content Officer for e.Republic. 

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