For many, there is confusion over what is meant by “search engine optimization” vs “search engine marketing.” After all, if I’m optimizing my website so that it gets more traffic and I make more money, isn’t that marketing using search engines?
Yes, but the question is not what the individual words mean, but what the full terms are generally understood to mean.
Search Engine Marketing
Search engine marketing, which we’ll refer to as SEM from here on, is generally understood to be synonymous with pay-per-click advertising, or PPC advertising. PPC advertising involves setting up ads on search engines via services such as Google AdWords or Yahoo Search Marketing. You determine for which keyword searches you want your ads to show up and you control, to a point depending on the specifics of the service you are using, whether that ad shows up as the first ad or after other ads. Yahoo Search Marketing uses an auction system so that whoever is willing to pay the most per click (you only pay if someone clicks on your ad, not when it just shows up on a page) gets their ad displayed first, since the first ad tends to get more clicks than others. Google AdWords also uses an auction system, but combines it with other factors to determine the order in which ads are displayed.
SEM can also include setting up methods by which the results of a campaign can be tracked as well as making changes to the website receiving the traffic so that more benefit can be received from the traffic. It’s one thing to get a lot of traffic to a website, but what do you do with it once it’s there? While a company might receive benefits from directing traffic to their homepage, there are other methods, such as creating landing pages, forms to submit information, and implementing conversion tracking in order to funnel website visitors through a path and get them to do what you want, whether that is to request more information, submit their contact info, or make a purchase.
Search Engine Optimization
Whereas SEM is focused on certain external methods of driving traffic to a website, SEO involves making changes to a website in order to get it ranked higher in the natural results of search engines. Title tags, alt tags, meta tags, content, url structure, javascript, and page size are just some of the items that can be modified to affect how a website is ranked. Once the traffic is to the website then it is handled in much the same way as with SEM.
One major difference between SEM and SEO is that while an SEM campaign can be created within minutes and results effectively measured within weeks or even days, SEO is more of a trial and error process and generally takes months before results can be accurately measured.
Of course these are my own explanations of the differences between SEO and SEM. Other people might explain things in a slightly different way, and in truth the business is fairly nascent and so there is substantial ambiguity and misinformation about these services and what they include, what works, and what doesn’t. If SEO and/or SEM is important for your business, my advice is to do plenty of research and get educated. Otherwise you’ll feel completely helpless and you’ll feel like people are taking advantage of you, whether they are or aren’t.
My definition of SEM and SEO differs from yours. For one, you define SEO as using internal methods only. In fact, SEO also involves external link building which can be both free or fee-based.
SEM to me is the larger umbrella term used to describe any activity that is going to bring traffic from a search engine be it PPC advertising or not. SEO is a subset of activities that are geared toward bringing in organic traffic i.e. clicks from the natural results provided by a search engine.