More than 90 percent people use search engines like Google, Bing and Yahoo to find services and products. Websites are meant to be discovered by search engines. SEO and SEM are strategies used to increase site traffic, and either, or both can be employed.

Search engine optimisation (SEO)

Search engine optimisation (SEO) is the practice of making changes to your website which increase the quantity and quality of free traffic to your website - through organic search engine results. Search engine optimisation can be a complex process but it can drastically improve the success of your website. It involves an ever-changing list of steps and processes - adjusting or rewriting website content and site architecture - which attract the attention of search engines, so increasing the visibility of your website in search engine results and bringing you more organic traffic. 
SEO is about optimising your website to get better rankings in the search results while SEM goes beyond SEO.

Search engine marketing (SEM)

Search engine marketing (SEM) is a form of Internet based marketing that involves the promotion of websites by increasing their visibility in search engine results pages (SERPs) primarily through paid advertising.SEM includes search engine optimization (SEO), pay-per-click (PPC) advertising,  social networking, competitive analysis, paid listings, contextual advertising, geo mapping, Ad Sense and Ad Words, multiple media formats (such as YouTube) and any other search engine services that will increase search traffic to your site.

SEO and SEM are not competing services. Search Engine Optimisation is considered a part of Search Engine Marketing. The aim of both processes is to increase visibility in search engines.