Commercializing a City’s Website

5.3 Commercializing a City’s Website

Controversies: 4.14, 6.14, 6.17 Key Words: city, home page, advertising, fairness Case Complexity → Low CD: 4.16 Cities-Counties Ethics Issues

As the newly appointed city manager of Anytown, USA, you are determined to bring your city into the Information Age as quickly as possible. Within two months after taking your new post, you establish a Division of Information and Technology Services and order the director “to get all city agencies on the Internet within six months.” The director took her charge seriously and formed a task force to determine what would be needed to bring the city online. After three months of discussion, the task force reported to the director the city should develop a home page with links to each city agency. Additionally, the task force recommended that the city sell advertising space on its home page. Task force members felt that this would be a good way to help recover the costs of acquiring new computer hard- ware and software needed to go online. Moreover, you have made it clear that you strongly favor public-private sector partnerships, especially if they promote eco- nomic development.

Th e director asks you, the city manager, how she should respond to the ques- tions that follow. What would you say to her?

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Discussion Questions

As the director of ITS began to mull over the recommendations of the task force, she asked herself:

1. Are there any ethical or legal issues in selling advertising space on the city’s home page?

2. Do government agencies accept advertising on print publications such as annual reports, tax forms, etc.?

3. Is selling commercial advertisements on the city’s home page any different than, say, placing commercial ads on municipal buses?

4. Can the city refuse to advertise some products or services?

5. Would a company bidding on a city contract be allowed to place an advertise- ment on the city’s home page?

6. Would such an ad create the appearance of a conflict of interest?

7. Would political ads be forbidden?

8. How would the city set advertising rates and choose between competitors?

9. Should a disclaimer be placed on the home page stating that the city does not endorse the products or services being advertised?

Case Assessment

Liangfu Wu, Director, Information Services, Village of Downers Grove, Illinois:

Th e issue that the city manager faces deals with a fundamental question concerning the role that government plays in the society. As it is impor-

tant for a city to maintain adequate revenues to support its services to the community it serves, which is the main goal of this new city man- ager, public agencies need to realize that not all revenue sources avail- able today can be considered a financial solution for the agency.

For a municipality, two major funding sources are service-based fees and tax. Both are considered public funds. Attached to the public funds are two principles underlying any decisions the city manager makes. First, whether a municipality that operates based on public funds can compete in the market place against other private business, in this case, those marketing and advertising firms. A website owned and operated by the city is basically a public service. To sell advertising space on the website clearly constitutes unfair competition between the city and pri- vate advertising firms. The private firms could argue that the city uses their tax dollars against private businesses that pay the tax to the city.

Second, due to its funding sources, the city, when providing services, cannot discriminate against one or more groups because of their social status. It is the principle of fairness in government

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services (Klosko 1992). Based on this principle, if the city were to start selling advertising space on its website, it would have to offer

the same space and price to all private parties, including political organizations and those whose contents may not fit the image of a public agency.

Although the city could technically claim that its website is totally funded on the revenue generated from the commercial space, the own- ership of the website links the contents back to the city.

Stephen K. Aikens, Assistant Professor, Public Administration Program, Department of Government and International Affairs, University of South Florida:

AUGUST 8, 2008 FROM: THE CITY MANAGER, CITY OF ANYTOWN TO: THE DIRECTOR OF INFORMATION AND TECH- NOLOGY SERVICES RE: SELLING OF ADVERTISING ON CITY WEBSITE

If done properly, the selling of advertising on our city website can generate a stream of revenues that can reduce the cost of providing government information and services online and save taxpayers some money. Another way of reducing the cost of our city government ser- vices online is through sponsorship, whereby sponsors fund parts of the city’s web presence, or support this effort by providing services or equipment in exchange for visible acknowledgement. Although either approach can be legitimately used to finance our government’s web presence, serious ethical consequences regarding appearance of favor- itism and conflict of interest can arise if appropriate guidelines are not developed and strictly enforced. Regardless of the form of revenue gen- eration utilized, we must exercise due care to retain our government’s independence in the eyes of citizens. The management of our advertis- ing or sponsorship can be done through in-house management of web space or through the use of a third-party supplier under appropriate agreement. Cost and benefit considerations, coupled with the avail- ability of internal expertise, must be carefully weighed in deciding the most appropriate route for our city, and must be included in the evalu- ation of the business case for making use of advertising or sponsorship on our city website.

Considering the potential ethical implications and controversy sur- rounding the commercialization of government websites, we must ensure we have the trained resources to manage, promote, and sell the adver- tising services. The Division of Information and Technology Services must carefully judge the balance between the effort required to achieve

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the maximum value from advertising, and the income that is earned. In designing the advertising or page, we should ensure the advertiser’s brands do not compete with or detract from the effectiveness, integrity,

and appearance of our government, and attention should be given to avoid any implication of endorsement of products or services. We must also ensure we have a published privacy statement on the website and must adhere strictly to this statement if we choose to use information about user behavior in selling advertising space.

In order to avoid appearance of favoritism and conflict of interest, the city website should not accept political advertisements. In addition, all advertising space should be promoted at arms length, and any sponsor- ship be sought in an open and even handed manner using the appropri- ate public sector procurement methods to secure contract agreements. Furthermore, we should seriously consider prohibiting companies or fi rms involved in significant commercial or contract negotiations with our city from sponsoring or advertising on our city website, and we should develop and document strict standards as to the nature and type of products and services that will be accepted for advertisement on our website. In whatever we do, we must remember that our government exists to serve the public interest, which implies the need to balance our online services revenue needs against the public trust and citizens’ confidence in their government.

Author’s Note: Case based on an Internet listserv discussion. Names and places are fictitious.