Channel01 - 10:56 pm on May 6, 2010 (gmt 0)
I would not recommend using Yahoo's Campaign Optimization feature. It's basically Yahoo's version of Google's Conversion Optimizer. I've had great success with the Conversion Optimizer for Google so I decided to try out Yahoo's version last year for 2 clients. I used the revenue data piece which basically allows you to input ROAS targets by ad group and Yahoo's system takes control of the bids to try to hit the targets. Long story short, the end result in both cases for me was CPC inflation and worse conversion. In most cases, the targets weren't even being hit and I had set them conservatively.
I can't say I was terribly surprised by the results. This is a hidden feature in Yahoo and they do next to nothing to promote it. I was talking to my rep about it before testing and I honestly don't even think he knew about the feature. I'm a glutton for testing stuff out though so I wanted to see if there was any value to the setting.
So, yeah, you're probably best off with the Conversion Optimization turned off. Those first two settings don't apply then.