The Conversion Optimizer uses your conversion tracking data to get you more conversions at a lower cost. It achieves this by optimizing your placement in each ad auction to avoid unprofitable clicks and get you as many profitable clicks as possible.
You might already follow a similar strategy by bidding higher for keywords that convert more often and lower for keywords that convert less often. But the Conversion Optimizer can adjust your ad's placement based on many other factors, including the keyword's broad match query, the user's location, and the conversion rates of Google's search and content partner sites.
These extra adjustments enable many advertisers to achieve double-digit percentage increases in conversions, while paying the same price or less for each conversion.
Check out the AdWords Conversion Optimizer page to get started or to learn more about the Conversion Optimizer.