A new advertising icon was released last week by a privacy advocacy group in conjunction with a group of advertisers and agencies as part of an effort to educate consumers about behavioral advertising and head off federal regulation.

The “Power I” icon was released last Wednesday by the Future of Privacy Forum (“FPF”), a privacy policy think tank, along with a research report on the potential efficacy of icons and phrases in providing notice to consumers. The icon was developed in collaboration with advertising holding company WPP and input from ad industry leaders and privacy advocates.

The “Power I” icon is meant to be added to online advertisements that are targeted based on consumer data. When consumers click on the icon, they would be directed to a page containing information about how the delivery of the advertisement is influenced by the consumer’s browsing history and demographic info.

Although no advertisers are under any legal requirement to adopt the “Power I” icon, there is a consensus among industry leaders that greater self-regulation is necessary to ward off government intervention. In July, a consortium of cross-industry trade groups released their “Self-Regulatory Principles for Online Advertising,” which included principles relating to increased notice to consumers regarding behavioral advertising and a major campaign to educate consumers about online behavioral advertising.

The debate over data gathering and behavioral advertising has grown more vocal over the past year. Congress held hearings on the subject in June 2009 in which executives from Facebook, Google and Yahoo were called to testify. In February 2009, the Federal Trade Commission (“FTC”) released a report which noted a number of consumer benefits of behavioral advertising but which warned that greater disclosure to consumers regarding data collection practices may be necessary – especially in light of the length and complexity of privacy policies posted on most companies’ websites.

Will regulators deem the new icon sufficient to warn consumers that certain advertisements are targeted based on the consumer’s behavioral data? Stay tuned to find out!