Identified Hits is a new Facebook ad network that is taking a page from the Beacon play book. Beacon, you'll remember, is Facebook's endorsement-based ad service that uses user actions on outside sites to endorse products and services in the News Feed. Identified Hits is utilizing the same concept to push Facebook applications with a concept it calls App Endorsements.
Like Beacon, App Endorsements take a user action -- installing and using an application -- and turn it into an advertisement built around an endorsement from the user. Unlike Beacon, these ads don't run in the News Feed, and they're completely opt-in from the start.
An App Endorsement (see the sample below) is more effective at driving traffic to an app, according to Identified Hits founder Nathan Blecharczyk, because they are personal. That's the same argument Zuckerberg and company made for Beacon. Blecharczyk, wisely looking to avoid the sort of conflict that was caused by Beacon when it was rolled out last fall, was quick to highlight differences between the two services. "These ads differ from Beacon because they are strictly opt-in and do not broadcast actions from outside of Facebook," he told us. "[Also] every one of our ads allows the viewer to opt out of receiving future ads from any particular advertiser."
Identified Hits ads are sold on a CPM basis and are shown on the landing pages of publisher apps in its network. Because ads are only sent to friends of users of the advertisers, and only sent to publisher apps that those friends have installed, Identified Hits will need to build a fairly large publisher network before they have any kind of usable inventory. In other words, in order for App A to get an ad shown on App B, users of App A need to have friends who use App B.
The company says that they're showing ads on app canvas pages rather than the News Feed because the News Feed messages are easily overlooked. More likely it is because ads of this nature are not possible in the News Feed except via official channels, and because if they were they would likely violate Facebook's terms of service.
Another wrinkle is that these ads are completely opt-in. Users are asked to explicitly grant permission for their likeness to be used in an advertisement before any are shown on canvas pages of their friend's apps. We're skeptical of how many users would actually do that, but Identified Hits says that it has seen "yes" rates are high as 70%.