Conversion Optimizer, in my opinion, is often an under-utilized bidding option for AdWords campaigns. I’ve spoken with many search marketers who are nervous to try out this bidding method due to fear of the unknown. I’ve often found that campaign CPAs can be reduced, in some cases by 50%, when enabling Conversion Optimizer.
Essentially, this bidding method replaces the traditional cost-per-click bid at the keyword level which many pay-per-click advertisers are accustomed to with a Max CPA bid (basically what you are willing to pay for a conversion).
Conversion Optimizer works best if you have a significant amount of conversions, in fact each campaign needs at least 15 conversions every 30 days to be eligible to utilize this feature. The more conversions you have the better as this gives Google data and insight on how to bid effectively so it can achieve your CPA goals. Its a dynamic bidding option that factors your historical conversion rate data for each keyword in the campaign and bids according to the predicted outcome.
I’ve found that I get the best results when I follow Google’s recommended CPA bid. In some cases I will bid higher than the recommended amount. I have also seen campaigns tank when a Max CPA bid is set so low that impression and click volume declines dramatically.
Below is a great video tutorial from the AdWords Classroom: