There are two distinct areas within Search Engine Marketing - Organic and Pay Per Click (PPC). There is a lot of discussion about which form is more effective - however most people in the know agree that organic clicks are twice as effective as a PPC in terms of a conversion rate.
PPC results are obtained through selecting one or more keywords, making a bid of how much you are prepared to pay for a click as a result of a search for your keyword, and then setting a budget of how much you are prepared to spend over a period of time on these clicks. The more competitive the keyword is, the higher your bid must be to ensure that you recieve traffic. One thing to keep in mind with PPC is that such traffic does not always equate to qualified leads or sales.
Search Engine Optimization, SEO, is a sub-category of search engine marketing, the process of improving volume and quality of traffic to a website from search engines via "organic", "natural" or "algorithmic" search results. An organic search result is one that is obtained by the search engine itself "ranking" a site for relevancy and content. Typically, the higher a site is presented in the search results, (or the higher it "ranks"), the more searchers will visit that site.
SEO can also target specific searches including image search, local search and industry specific vertical search engines.
As a marketing strategy for increasing a site's relevancy, SEO considers how different search algorithms work, including what keywords people utilise when making a search. These efforts may include a site's coding, presentation and structure, as well as correctiong issues that can prevent search engine indexing programs from fully spidering a site. More specific efforts may include additional unique content being added to a site as well as ensuring that the content is easily indexed by search engines along with being appealing to human visitors.