Online Advertising as an Alternative Revenue Source.

• Author: Edberg, Dana

An emerging alternative to traditional revenue sources is paid advertising on government Web sites. Although the potential revenue from online advertising is significant, it also raises a host of legal, ethical, and administrative issues. This article examines these issues and suggests guidelines for developing online advertising policies.

Paid advertising on public property has been the subject of much debate, not to mention legal action, through the years. With the proliferation of government Web sites and e-government services, the potential revenue from online advertising promises to reinvigorate this debate. While some argue that government institutions should be insulated from commercial advertising, others contend that government should take advantage of all sources of revenue in order to offset rising costs and minimize the need for tax increases. There are many others who balance precariously on the fence of this debate. They do not want to restrict alternative sources of revenue, but worry about the problems that inevitably result from paid advertising on public property. These problems include concerns over potentially distasteful advertisements and government's ability to effectively manage advertising without illegally discriminating against particular viewpoints, individuals, or organizations.

Unfortunately, issues that are interesting to debate can be miserable to administer. This is certainly true of online advertising on official government Web sites. As government agencies make greater use of the Internet through increasingly sophisticated Web sites, many administrators will be forced to tackle the question of whether or not they should allow paid advertising on these sites. This article discusses some general concepts of online advertising, identifies the major advantages and disadvantages of advertising on government Web sites, and suggests issues for governments to consider as they develop online advertising policies and procedures.

Advertising on the Internet

Many commercial and non-commercial Web sites now offer space to advertisers. As individuals navigate the Web, advertisements frequently pop up before and after Web pages are displayed, filling the screen with many small advertisement windows. Despite the preponderance of online advertising, many advertisers are anxious to see the development of Internet advertising's final frontier--government Web sites.

When it comes to advertising, experts say government Web sites are unique in that they convey a sense of legitimacy that most commercial Web sites cannot duplicate. One advertising executive says people believe that the content of government Web sites is carefully edited and, as such, is generally more accurate than that of most other sites. In addition, visitors to government Web sites usually have a specific information objective, which makes them more likely to read pages in detail rather than simply scanning them. This characteristic suggests that visitors of government Web sites also might take the time to more thoroughly view advertisements. As a result, government Web sites are considered by many to be prime real estate for serious, content-related advertising.

Forms of Online Advertising

Advertising on the Internet usually takes one of three forms: banner ads, featured placement or sponsorship ads, and pop-up ads. Banner ads are rectangular images, or banners, that communicate an advertising message and serve as a link to the advertiser's Web site. Banners typically spread across the top of a Web page and span the entire width of the page. Featured placement or sponsorship ads tend to be smaller than banners and are placed closely to the related content. For example, a featured placement ad for a retailer like Macy's would be placed near page content related to shopping. Featured placement ads also contain links to the advertiser's Web site. Pop-up ads are displayed in separate windows from the sponsoring Web site. Popup ad windows usually are displayed as soon as the user clicks on a given link, but may even precede the display of a selected page.

Pricing Structures

Online advertising borrows its pricing structure from more traditional print and broadcast advertising. In traditional media, advertising prices are based on the number of people who see or hear advertisements, referred to as "impressions." Pricing for online advertising is expressed in CPM, or the cost per thousand impressions. Pricing can vary widely depending on the demographics of a Web site's visitors and the relative demand for space. The price of a banner ad, for example, ranges anywhere from $3 CPM to $30 CPM. One e-government...