Should Government Web Sites Sell Commercial Advertisements?

As states continue to struggle to meet their revenue projections, more and more government agencies look to advertising to rescue them.  Once limited to naming stadiums and entertainment centers, this practice is now being extended to New York City subway stations and web sites for State Agencies in New Jersey.

A bill introduced in the New Jersey Senate would allow several state agencies— the New Jersey Economic Development Authority, NJ Transit and the New Jersey Lottery—to initiate a two-year pilot program to test the feasibility of a state website advertising program. It would require the agencies to follow strict guidelines regarding the content of the advertising and would require disclaimers indicating that the inclusion of Internet advertisements does not imply endorsement by the State. Despite these safeguards, Senate Bill 1531 has been withdrawn to reconsider how best to address conflicts of interests and other related issues.

Advertising on government websites create several legal and policy concerns. First, the federal government controls “.gov” Internet domains. Under the guidelines established by the U.S. General Services Administration, “a .gov domain may not be used to advertise for private individuals, firms, or corporations, or imply in any manner that the government endorses or favors any specific commercial product, commodity, or service.”

The three New Jersey agencies targeted for the pilot program use .com or .net domains, so the guidelines would not necessarily apply; however, they would be a consideration if the program were expanded to other state agencies. Agencies using .gov domains would have to create a new webpage to accept advertising or abide by the rules of the federal government.

For state websites outside the purview of the federal government, other legal concerns still exist. The most basic is that the public expects government websites to be unbiased. Accepting advertisements from some companies and organizations but not others can lead to allegations of preferential treatment. Also, even with the use of disclaimers, allowing an advertisement to run on a state website implicitly suggests that the state approves of the product or service.

In addition, Internet advertisements also generate privacy concerns. For instance, many companies automatically collect information about users when they click on an online advertisement, which is later used to further market their products. Advertisements can also redirect users to other websites, which may contain questionable content that may reflect poorly on the state.

Given these potential liabilities, New Jersey and other states around the country are treading carefully as lawmakers balance the desire to generate revenue and protect the integrity of their websites. Many states have implemented policies that discourage or limit website advertising. In New York State, agencies are permitted to link to external websites that provide “information or services necessary for the proper performance of an agency function or in furtherance of an agency mission.” However, the New York State Information Technology Policy provides that “agencies should not provide links to private businesses, unless all such businesses are provided equal access; unless a formal business partnership has been established and/or unless the reason for the link is primarily educational or resourceful in nature.”

In the end, the potential revenue from website advertising must be carefully weighed against the potential liability and public policy considerations.  As web site advertising continues to take the number one place in the consumer market, the public debate on the public use of new media promises to be interesting.

Donald Scarinci is a managing partner at Lyndhurst, N.J.-based law firm Scarinci Hollenbeck.  He is also the editor of the Constitutional Law Reporter and Government & Law blogs. Should Government Web Sites Sell Commercial Advertisements?