Search engine marketing encompasses all marketing that involves traditional SEO work, buying and maintaining pay-per-click (PPC) ads like Google AdWords, and search engine submissions through paid-inclusion.

An easy analogy is to think of search marketing as being similar to the types of tactics you would use if the search engines were magazines or newspapers:

1. SEO is like public relations.  You can either do your PR in-house, or you can hire a PR firm, or you can sit back and do nothing at all, and hope that people or the media just “stumble upon” you. 

2. Paid Listings (Pay Per Click) is literally like buying advertising:  you pay for the ability control where your ads show up, and when they show up, based on a contractual, financial agreement.

3. Paid-inclusion is like an “advertorial”:  you’re paying for the privilege of appearing in a publication, but you appear to be part of the editorial matter, not a traditional ad.

Search Engine Optimization
Search engine optimization is the art and science of getting Web search engines and directories, such as Yahoo and Google, to notice your Web site and add it to their listings. This is referred to as a "free, organic, or natural” process because you're not paying the search engines a fee for your listing to appear in the organic listings.  SEO experts alter your site so that it may rank well for particular terms used in Web searches.  The idea is to tweak (optimize) your site so that it lands at or near the top of the results of a Web search, or at least on the first page of results.

Paid Placement / Paid Listings
Paid placement or paid listings, also called “pay-per-click” advertising, are short text advertisements, with links to the advertiser’s site, which appear on the pages that display the results of an Internet search.  Google, for example, displays “sponsored links” at the top of each results page and down the right side.  Yahoo Inc. shows “sponsor results” at the top. Generally the range of bidding starts at five cents a click, marketers say, and goes all the way up to about $100 for some of the most competitive terms.

Paid Inclusion
Paid Inclusion is an integral part of SEO. Paid options allow Web marketers to guarantee that pages get included in a search index. These services are usually priced on a per-URL basis (ranging from $15 - $35 apiece) and typically guarantee a year of inclusion. The major engines offering PFI are Inktomi, Alta Vista, and FAST. In paid inclusion, a company pays a search engine for the right to submit the entire content of its Web site, or selected pages, directly to the search engine’s database. With these listings, search engines guarantee to review your site on a frequent basis and include your info in their database from which search listings are drawn.