States, cities test Web advertising waters

States, cities test Web advertising waters


Advertising on state and local Web sites is catching on'but quite slowly.

Government officials voiced reluctance at promoting businesses and identified unresolved policy questions. Proponents of Web advertising concede that the medium is unlikely to be a gold mine for cash-strapped state and local governments.

Honolulu, a pioneer in posting paid advertisements on its site, reported no problems with its program. The city has been emblazoning its Web site with banner ads since last August.

Courtney Harrington, Honolulu's chief information officer, said the advertising program has not been around 'long enough for there to be a trend in advertising sales. I would expect that once all the commercial spots are sold we would see $100,000 a year' in revenue.

About 892,000 people live in the city and county of Honolulu, the 11th largest U.S. metropolitan area.

The advertising program 'has been a success with no downside,' Harrington said. 'I have not received one phone call or e-mail either for or against this. It has just been accepted.'

Harrington said revenue from Web advertising won't cover the cost of maintaining Honolulu's portal, but it lets the city maintain low fees for Web transactions, such as renewing driver's licenses.

Raising eyebrows

There is definitely interest in online advertising among state and city officials. Harrington said he receives two to three calls each week about Honolulu's advertising program.

Honolulu contracts with govAds, a subsidiary of eGovNet Inc. of Columbus, Ohio, to sell the advertising. There are some caveats on the ads Honolulu will accept: no political ads, and no ads for alcohol, tobacco and other products that can't be sold to minors.

The city posts a disclaimer indicating that it does not endorse the products advertised on the site. 'That's not generated any concern,' Harrington said.

A recent visit to the Honolulu Web site, at, brought up ads for banks, auto insurers, realtors and vehicle manufacturers.

Catching on

Salt Lake City has contracted with govAds to place advertising on for the 2002 Summer Olympics. GovAds last month signed a deal with Dade County, Fla., to place advertising on

State officials and industry sources say a handful of state tourism sites have sold advertising, and state universities have moved aggressively into the field.

But opposition to Web advertising runs deep. 'I've called a moratorium on advertising,' Kentucky CIO Aldona Valicenti said at a discussion of Internet issues held recently at the National Press Club in Washington. 'The agencies are not allowed to advertise.'

'Anything you do in government is considered normal ... anything you do on the Web is considered new and weird.'
Valicenti, who is president of the National Association of State Information Resource Executives, expressed concern about implied endorsement of advertisers' products.

'Once you do this, you can't go back,' she added. 'I think citizens will hold states to a higher standard' than they do advertisers. 'I think it is a policy issue.'

No state government has yet launched a full-scale Internet advertising program, though several have explored the idea or taken initial steps.

Iowa, which is facing a budget shortfall this year of $285 million or 6 percent of its general fund, has requested proposals for companies to sell advertising. So far, govAds and NIC Inc. of Overland Park, Kan., have responded.

Iowa CIO Richard Varn said Web advertising 'wouldn't be my first choice of things to do.' He said funding technology is a public responsibility, and public funds should cover a state's expenses. But revenues from Web advertising would help Iowa start new technology programs, he said.

Varn cited various other examples of how governments sell advertising, including stadium names and signs, transit advertising, lottery advertising, public broadcasting and sponsored curricula. 'Anything you do in government is considered normal, while anything you do on the Internet is considered new and weird,' he said.

The Iowa Newspaper Association has denounced the state's plan to sell Web advertising and mounted a lobbying campaign against it.

'Our take on it is the government should be in the governing business, and the media should be in the advertising business,' said Bill Monroe, the association's executive director. 'They think they are going to raise a lot of money, and nobody is going to complain. It's a fallacy.'

Monroe warned that controversial political pressure groups would seek to advertise on Iowa's Web sites. 'The Information Technology Services Department says they are going to pick and choose the ads. You can't do that; it's unconstitutional,' he said.

Right to choose

Web advertising proponents said governments are on firm legal ground when they bar certain advertisers, as long as they adopt reasonable rules.

A bill pending in the Minnesota Senate, Senate File 1895, would let the state post ads on its Web site. But the Minnesota Newspaper Association and the Minnesota Broadcasters Association have balked at the plan, which calls for investing ad revenue in technology.

'We're opposed to the legislation because this kind of venture would siphon off advertising that normally would be earmarked for broadcast media,' said Jim DuBois, executive director of the broadcasters' organization.

Advertising industry officials said Web advertising revenue likely would be scanty. Banner advertisements on commercial sites cost anywhere from $1 to $60 for every 1,000 viewer impressions. Ads on state and local Web sites likely would be priced at about $33 per thousand impressions, an industry Web advertising executive said.

'That's 3 cents an ad,' the executive said. 'If you think of all the page views, that's a lot of ads.'


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