Had a Horrible Month - Need Advice

I have been promoting a few merchants in Shareasale by Adwords through direct linking.

I achieved a conversion rate of 5-6% for my main merchant from Jan - Sep. Then suddenly, the conversion rate dropped to below 2% at the end of Sep, and then went even further to below 1%. As a result, I almost lost money during October.

The sudden drop in conversions coincided with a sale that they were holding. I suspect that this was interfering with the tracking of sales in some way. Shareasale conducted a technical examination but could not find anything wrong. However, they said that the merchant sales has been going down during this period.

Eventually I wrote to the merchant and they replied that they will make a thorough check. They then wrote back saying that they have made some adjustments and that things should be back to normal. I have now opened up my campaigns again. Although things are much better, the conversion rate is still hovering around 2%.

I am beginning to think that there may be other factors involved. One could be a change in the algorithm of Adwords that result in less targeted traffic. Another would something wrong with the tracking system of Shareasale, particularly with referred traffic from Adwords.

One of my friends who is a merchant in an unrelated field told me that he had suffered a massive drop in inquiries to this business during the same period. He does not track his campaigns but he is sure he gets most of his traffic from Adwords. He told me that he saw a large increase of traffic from irrelevant terms. He is Adwords certified and so he should know what he is talking about.

I wonder if anybody else had experienced a drop with conversions using Adwords and Shareasale during this period. I wonder if there is anything I have overlooked and that I should look at. Thanks.