As I understand things, it is general industry practice that the "latest" referer that actually gets the sale.
Just to expound a bit...
As you alluded to, it's easy to pass someone through to a site by targeting a cheap (maybe) generic term. Sometimes you get lucky and catch a sale. If you are really putting the work in to determine highly effective and well targeted keywords (and probably more expensive) you will get the sale more often.
Just like in all sales careers, its the salesperson that really caters to the customer and is a good closer that gets the sales and makes the money.
Using car sales as an example: Any car salesman could pay an enterprising fast food employee to hand out 100 business cards to people going through the drive through (it's sort of generically targeted since all these people do have cars). The smarter car salesman will pay more to reach a more targeted audience, such as having an employee at an auto body shop to pass cards out to people who had recent auto accidents.
Which of these two would have better conversions? Obviously salesman number 2 would generate better quality leads. Salesman number 2 would also be willing (and able) to pay much more per card.
As a general rule you get what you pay for. Buy 5 cent click you'll get 5 cent results.
[edited by: Frequent at 11:47 pm (utc) on Aug. 27, 2006]