From the issue dated April 25, 2003
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Some Colleges Add Ads to Their Web SitesBut institutions shy away from commercial postingsBy DAN CARNEVALE When students at the University of Oklahoma log on to the campus Web site to
While advertisements appear on most commercial Internet sites, colleges have kept their Web sites free of ads. A few institutions, however, are experimenting to see if they can display some commercial logos and advertisements on their Web sites without annoying students and professors. The presence of ads and commercial announcements, like sponsorship logos, on college Web sites vary widely. Oklahoma's "Current Students" page has ads for Apple and Dell computers as well as for a Las Vegas travel deal. In a product-discount deal with Apple and Microsoft, Ball State University's page for students has the companies' logos together with the text of a "Campus Agreement." The University of South Carolina at Spartanburg's athletics page is littered with logos -- for Pepsi, Outback Steakhouse, and Courtyard by Marriott. But such institutions are the exception to the norm, at least for the time being. In general, people can visit college Web pages without being subjected to the barrage of the banner and pop-up ads launched by many commercial sites. And most colleges plan to keep their Web sites ad-free. Many college officials harbor misconceptions about running advertisements on their Web sites. Some believe that Educause, an education-technology consortium that oversees the ".edu" domain, forbids such ads. That is not true. The Internal Revenue Service, however, limits what commercial material a nonprofit entity can post on the Web without paying unrelated-business income tax on any revenue the site generates. The larger issue for colleges is deciding when, if ever, it's appropriate to welcome advertisements or sponsorships (which are not usually tied to purchasing products) on their Web sites. Among the few institutions that put commercial material on their sites, even fewer post actual advertisements, permitting instead only the logos of companies that may offer special deals to students. Some institutions hope to make some money through the commercial deals. So far, a few colleges have made thousands of dollars by accepting such ads, but many have found it a tough way to generate revenue. Other institutions have developed policies specifically banning ads on their Internet sites. Such policies, though, can complicate matters for academic officials who want to recognize commercial sponsors. For instance, many varsity teams are supported by corporate sponsors, but institutions often make their athletics departments create separate ".com" sites so as not to taint any ".edu" Web pages with the Gatorade logo or the Nike swoosh. Rules of the Game Steven L. Worona, director of policy and networking programs at Educause, says the group does not restrict what can appear on colleges' Web sites, so long as the content is legal. "It is a question that comes up a lot," he says. "There are no content rules that are special to dot-edu." Nor does putting ads online threaten an institution's nonprofit status. Sean P. Scally, university counsel at Vanderbilt University, who is considered an expert in higher-education tax law, says colleges can attract advertising revenue without risk of becoming for-profit entities. "You can certainly put advertising on a Web site," he says, although, of course, "the entire site cannot be a commercial site." But even that small amount of revenue could be taxed if the IRS believes that it qualifies as unrelated business income, which means any revenue that a nonprofit organization receives from activities that are not directly related to its mission. The IRS released a clarification on advertising and sponsorship in January, but Mr. Scally says college officials will have to use common sense to determine what types of commercial messages can be put on colleges' Web sites. "If it walks like a duck and talks like a duck, it's probably advertising," and would be treated as a taxable revenue source, he says. But not all ads will result in taxable revenues, because many companies that have ads or logos on college Web pages don't pay for the publicity. For example, no money is exchanged for the ads in the "Current Students" section of Oklahoma's Web site, which is run by students. They choose to run ads from companies that offer students discounts on goods and services. No pop-up ads appear on the site. Usually one banner ad is placed on the top of the page, and two or three small ads on the right-hand side. The rest of the page features announcements, links to student services, and movie reviews or opinion pieces written by students. "It is the only dot-edu site that we have that has any sort of advertisements," says Jeffrey W. Hickman, a university spokesman. "It's not a revenue-generating type of advertising -- it's a trade." Ads have shown up on the page for about two years. During that time, Mr. Hickman says, he hasn't heard of any complaints. "It increased our student traffic to the site when we had the students have their own portal," he says. But some students say any commercialization of academic Web sites is wrong. Alex Lowther, a senior majoring in philosophy at Oklahoma, says he and his classmates should be able to use the university's online resources without being hit with advertisements. "It's really inappropriate, but it doesn't surprise me that OU would do this," says Mr. Lowther, who was a member of a now-defunct anticorporate and antiglobalization organization called Students for Social and Economic Change. Oklahoma, like many other institutions, allows credit-card companies and other commercial entities to solicit business on the campus. Mr. Lowther argues that students shouldn't be subjected to such commercialism, whether while walking to class or using the university's Web site. "It's really sort of a captive market," he says. Setting College Policies On many campuses, officials are only now taking up the issue of allowing ads on the colleges' Web pages. Brandi Hess, a graphic designer for Web services at the University of Southern Indiana, says administrators came to her asking whether it would be all right to recognize some sponsors on the athletics site. The officials wanted to come up with a policy outlining what can and cannot appear on the university's Web site. Ms. Hess, asking around, found out that many institutions already have such policies, and that others are in the process of writing them. Institutions that have written policies include Catholic University of America, Pennsylvania State University at University Park, the University of California at Berkeley, and Ulster County Community College, which is part of the State University of New York. Stephen J. MacCarthy, vice president for university relations at Penn State, says it bars advertisements from any of its Web sites that have ".edu" in the URL. "What we wanted to avoid was any paid advertising or anything that looked like any banner ads," he says. "We don't think it's an appropriate direction for the university to take." The policy does not affect Penn State's student newspaper, even though it runs ads in its online version under the university's ".edu" domain. The Daily Collegian is a separate entity, something that most people who visit the university's site would recognize, Mr. MacCarthy says. The dot-com bust, though, has left the newspaper with very few online advertisers. Gerry Lynn Hamilton, the general manager, says most of its ads are from local establishments, like pizzerias, which pay $99 per month for 33,000 page views and $600 per year for 400,000 page views. The university supports the newspaper's right to seek advertising revenue for its online edition, says Mr. Hamilton. "Since we provide our own hardware and software, and we're independent, the policy would not apply to us. If Penn State said no, we probably would have gotten our own site." Duke University's Web site, which runs no other commercial material, lists participants in a program that allows students to use their meal-plan accounts to pay for food at local restaurants, including Domino's and Papa John's pizza shops. Some have their logos, phone numbers, menus, and special deals included in the listings for the "Merchants on Points" program. When students get food from these restaurants through the program, Duke's auxiliary dining services get 18 percent of the revenue. That adds up to about $360,000 a year. Jim Wulforst, director of dining services at Duke, says the restaurants' Web presence is what drives the success of the program. "I'm doing the advertising on the Web as part of our contract with the vendors," he adds. Ball State has arranged deals for students to get discounts on Apple computers and Microsoft software. (The university bought multiple copies of Microsoft software at a discount, paid for with student fees; students can pick up copies for $5.) The university announces those deals on the information-technology page of its Web site, together with the logos of the companies. That is the only commercial material on the site, and the companies did not pay for their logos to appear on the site. And Ball State's Teachers College encourages freshmen to buy Apple Macintosh iBooks. A university Web page promotes the computer as a better deal than others. Donald King Jr., associate director of computing services, says the agreements between the university and Apple and Microsoft did not require that the corporate logos appear on the Web site. Ball State decided to include them, he says, so that students would readily notice the offer. Many student newspapers, athletics sites, and alumni pages have created separate ".com" sites to keep advertising separate from the academic-oriented ".edu" sites. Indiana University at Bloomington required the student newspaper, The Indiana Daily Student, to create its own Web site so that ads that appear would not appear on any of the university's ".edu" pages. The athletics Web site for the Ohio University Bobcats has only a single logo from Adidas, one of the university's athletics sponsors, near the top of the page. Still, the university decided to put the athletics site in the ".com" domain. Advertising is ubiquitous in the world of college athletics, notes Hub Burton, associate vice president for university communication and marketing at Ohio. Students see it all the time on scoreboards and signs at stadiums. Nevertheless, the university wanted to make sure that students didn't see ads on any Web pages that included ".edu" in the URL. "That's kind of been our guiding direction and criteria in maintaining an advertisement-free Web site," he says. Despite the stigma often associated with ads on academic Web pages, some college officials are debating whether they could use the ads to raise money during tight economic times. Online advertising may become more of an issue as institutions face budget cuts at the state level, says Penn State's Mr. MacCarthy. "It wouldn't surprise me if some universities began to turn to ads as a way to make up some of these lost funds." But observers doubt that advertisements will play as big a role on college Web pages as they do on commercial sites. "I would think that if people were thinking about it, it would be in a very low-key and tasteful way," says Peg O'Donnell, assistant general counsel at Catholic University. "I don't think universities are going to go to those flashy ads, because those are kind of tacky. They're not going go to those pop-up boxes that you can't get off your screen." SPONSORSHIP VS. ADVERTISING The Internal Revenue Service recently released regulations to distinguish between corporate sponsorships and advertisements in the activities of nonprofit organizations. Under the regulations, colleges can display announcements of sponsorship on their Web sites without any tax consequences. But if the announcement meets any of the criteria for being an advertisement, the college may have to pay unrelated-business income tax. If a college has to pay income tax on revenue from an advertisement, it can subtract from revenue calculations any expenses made in the production of the ad. If a subsidiary of the college, such as a student newspaper, loses more money than it makes, it does not have to pay income taxes on the revenues it collects from advertisements. Following are the criteria for sponsorship and advertisement: Sponsorship
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SOURCE: Chronicle reporting
http://chronicle.com Section: Information Technology Volume 49, Issue 33, Page A31
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Copyright © 2003 by The Chronicle of Higher Education