I have posted a summary of this on another thread, but believe this issue is important enough to open as a new topic for wider discussion.
Soon after I enabled AdWords conversion tracking, my conversion rates rapidly declined to 1/3 of pre-tracking days, with no changes to ad content, key words or per-click bids. I also noticed that the headlines of my ads were no longer appearing, thereby making them un-clickable. G's CS response was that it was caused by "unsafe" sites in the headline's HREF tag being blocked by my anti-virus software. Since my site is a very simple FP generated site, with no scripting or other potentially unsafe content, and I had never experienced any problems with links to my site except in the AW ads, I didn't buy it.
After reviewing G's generated page source for the differences between the HREF tags of the headlines of my ads and others that were being displayed, and those that were displayed properly, and turning conversion tracking off, which caused the headlines to magically re-appear, I dug into my N. firewall settings. There I found a particular character string in its ad blocking string list, that also occurred in the HREF block of my ads when conversion tracking was enabled.
A conversion tracking ad's headline href starts like this: href=/pagead/adclick?adurl=... The problem is "adclick", which occurs in the N. firewall ad blocker's list of strings that will cause an ad to be blocked. In fact, the ad blocker strips the entire offending href block from the page source before the page is displayed! A localized solution is to use the advanced configuration option in N. firewall or in any other ad blocking product that causes similar behavior, to remove the "adclick" entry from the list of ad blocking strings.
However, this problem will still occur on every search results page with conversion tracked ads, if the user has N. firewall's ad blocking enabled with its default settings. The effects on AW advertisers is profound: Those who start using G's conversion tracking will see their CTR and campaign effectiveness decline, even as impressions remain at normal levels. This will affect their ad's position and costs. AW advertisers using conversion tracking now may already be seeing high traffic key words marginalized and disabled for low CTR, and may not be getting the results they should.
I have reported my discoveries on the root causes of this behavior to CS in more detail this past weekend. My hope is that G will change the "adclick" string to something that will not trigger this behavior. I doubt hundreds of thousands of N. and other ad blocker software users will re-configure their software's parameters, or that every ad blocker software developer would remove the "adclick" string from their standard block lists, since there are probably good reasons for it being there to block other ads.
In the meantime, I have disabled conversion tracking, and my conversion rates are now back to pre-tracking levels.