SEO stands for Search Engine Optimization and SEM is for Search Engine Marketing and there is little yet huge difference between SEO and SEM. SEO is the part of SEM where efforts are to get more visitors to your website or blog. The only difference between SEO and SEM is that while SEO is free of cost and long term strategy, SEM is paid method to get more traffic.
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SEO has two components – On-Page and Off-Page SEO. Both these methods include working on website to get more results from search. SEO is a long term strategy and it takes time and patience and lot of hard work to get yourself into search results which is also known as as SERP or Search Engine Result Page.
SEM on the other hand is about paid advertisements on Google and other search engines. This is instant strategy actually. It is based on PPC model where you pay per visitor’s click on the ads.
Using SEM, you can get more targeted traffic depending on geography and interests of the people.
What we see in Adword tool from Google about the money is the money Google charge the advertisers for advertisements.
Although SEM is about paid marketing but is it incomplete without SEO. You can get good traffic by SEM but to work in longer term, you need to have SEO for your website as well.
SEM is broader term and SEO is part of it. Although both go hand in hand but they can never be used interchangeably. SEM is for those big organization that can’t wait to promote their content and are ready to pay for the right keyword but even they pay for SEM, they have to focus on SEM as well.