The cool tool from Google, the "Conversion Optimizer" was launched in September last year, see: Google Releases 'Conversion Optimizer' New AdWords Feature. The Conversion Optimizer is a new feature that would enable advertisers to meet their ROI objectives by automatically managing their (CPC:cost-per-click ) bids according to a maximum (CPA:cost-per-acquisition) objective.

The tool achieves this feat by collecting user data from your website and analyses it for the periods when the maximum number of conversions have taken place through the PPC ads. Once you've chosen the maximum cost per acquisition (CPA) for an adgroup it automatically varies your bidding with the objective of keeping the CPC minimized and your conversions maximized. Officially it has been stated as "showing ads when conversions are most likely to occur."

In a case study from Moritz Daan, CEO of Webgamic's CEO, at the Inside AdWords Blog the benefits have been detailed.

Further, advertisers whose campaigns have already enabled the AdWords Conversion Tracking and have amassed a minimum of 200 conversions in the past 30 days are eligible to use the Conversion Optimizer.

While the Conversion Optimizer is ideal for advertisers who want to manage their advertising costs around clear, defined conversion goals and that it allows for more precision and greater control over your budgets, there is a quizzical. To make this happen Google needs to have access to data about your users in order to know whether the conversions really took place or not and they could access such info through some cookies perhaps. Secondly, while it's believed that Google's tested the software well but it still could throw in some surprises as the algorithms may not be perfect.

Via: Google Press Center