The difference between SEO and SEM
Search Engine Optimization (SEO) and Search Engine Marketing (SEM) are not identical. These processes go hand in hand but are often thought of with only a diminutive differentiation. Search Engine Optimization is what is done to your site to ensure that the search engines rate your site well and you have a easy to use web site with search engine friendly (SEF) Menus and SEF URLS that Google, Yahoo, MSN and Ask.com can crawl through. Search Engine Marketing is doing the advertising and marketing of your site. Ironical this is all done "offsite" whereas SEO is mostly done "onsite". SEO is a more technical process than SEM and involves a deeper understanding of search engine algorithms.
Search Engine Optimization
Search Engine Optimization, or SEO, is the process of assisting the search engines in ranking your web pages by improving the on page features of your website and by promoting it through link building strategies like blogs, articles, and reciprocal link requests. The focus isn’t so much on traffic building. Rather, you are simply trying to ensure that the search engines rank your site well for your important keywords.
Search Engine Marketing
Search engine optimization is a branch of search engine marketing. With Search Engine Marketing (SEM) you are promoting your website by promoting it in various ways that get it noticed in the search engines. It is more than simply improving your website through SEO, though it does include that. SEM also includes pay-per-click advertising, inclusion fee listings, social media optimization, directory submissions, and related marketing tactics. All of these marketing strategies are designed to get your site noticed by the search engines so that you rank well for your important keywords. Notice, however, that SEO focuses more on your website whereas SEM might not necessarily be about your website but in how you promote it.
Pay-for-inclusion
Many SEM companies guarantee your site will be indexed by the search engines within a short period of time, and if you really want to you can directly submit your site to the engines. DO NOT do this until your site is properly prepaired and do not resubmit multiple times, as this is a form of spamming for which you may be penalized. Patience is the key.
Traditional Ads (PPC - Pay Per Click): Ads are displayed on the SERP (Search Engine Results Page). Generally these are text based ads written by the SEO/SEM advertiser. Ads are based on the Keyword entered in the search and fees are triggered by impressions. You pay for the ad even if it is not clicked through. You want to work with your SEO/SEM advertiser so that your ads Click Through Rate has a high percentage. You can easily spend hundreds a day for very little ROI.
Internet Marketing
Internet Marketing is a much broader term than either SEO or SEM. In fact, search engine marketing is a subset or branch of Internet Marketing. A good definition of Internet marketing takes into consideration all forms of media available through digital delivery. Therefore, this term must encompass a broad array of strategies that you can use to market your website and your business. Internet Marketing includes such activities as e-mail marketing, banner advertising, affiliate marketing, e-book downloads, podcasting, video marketing, viral marketing, RSS, and anything that uses the Internet as a mode of delivery for the purpose of promoting your business.