“Search Engine Marketing” was once was used as an umbrella term to encompass both SEO (search engine optimization) and paid search activities.
At Search Engine Land, we generally use SEM and/or “Paid Search” to refer to paid listings, with the longer term of search marketing used to encompass both SEO and SEM. Below are some of the most common terms also used to refer to SEM activities:
Paid search advertising
CPM (cost-per-thousand impressions)
The concept behind Search Engine Marketing is quite simple: when a consumer searches the Web through either a text box or by clicking through a directory hierarchy, he or she is in "hunt mode." This psychological state is unique because it signals to the search engine (and to marketers) that the person is looking for information.
Marketers understand that this "hunt mode" means that the searcher may very well be at the beginning, middle, or end stages of the buying cycle. When someone is researching a product or service to satisfy an immediate or future need they are in an unusual state: they desire relevant information and are open to digesting and acting on the information at their fingertips, all made possible by a search engine. This makes search engine results some of the best sources of targeted traffic, whether this traffic originates from "organic" unpaid search listings or paid advertising listings.
Google AdWords is by many measures the most popular paid search platform used by search marketers, followed by Bing Ads, which also serves a significant portion of ads on Yahoo.