CAPTCHAs or conversions? While just about every business hopes to boost its conversions, the ill effects of spam bots and screen scrapers have driven countless companies to implement CAPTCHAs on their websites.

In some cases, CAPTCHAs are poorly implemented, leaving users (and potential customers) scratching their heads as they try to decipher text so distorted as to be incomprehensible.

Not surprisingly, in an effort to find a better way to let humans in and keep bots out, companies have looked to ‘innovate’ and bring the world a better CAPTCHA. In 2009, a Microsoft patent for an ad-based CAPTCHA was discovered, and in 2010, a startup called Solve Media launched an offering for ad-based CAPTCHAs that it claimed delivered a much-higher-than-average 40% engagement rate.

But apparently there’s more work to be done, at least according to Detroit-based startup Are You a Human. As reported by VentureBeat’s Dean Takahashi, the company believes that there’s an even better way to keep the bots out — through gaming:

With Are You a Human’s tool, companies can embed a simple game instead. For instance, one minigame requires users to look at a set of five images and pick up the two tools and put them in a tool box. Or the user can drag and drop toppings onto a pizza. Since the games are dynamic and always changing, they are hard for computers to solve but easy for people to complete. PlayThru can improve security and entertain users at the same time, and it works easily on touchscreen smartphones.

According to a user survey Are You a Human conducted, the company’s game-based CAPTCHA is far more appealing to users than traditional CAPTCHAs. It gives them a “much more pleasant experience” according to Are You a Human’s COO, Reid Tatoris.

Currently, Are You a Human is being used on more than 200 sites and there are some 300,000 to 400,000 ‘sessions’ each month. Not surprisingly, the company’s business model will eventually involve the development of branded games.

So will your next CAPTCHA experience include a brief amount of gameplay? Naturally, given the popularity of gaming on the web today, Are You a Human’s approach seems well-timed.

But that doesn’t mean that a game-based CAPTCHA is going to be a good fit for every site. At the end of the day, CAPTCHAs interrupt the user experience, so publishers will probably always need to think carefully about when and how they’re implemented (if at all), no matter how fun or effective anyone tries to make them.