The easy answer is that the SEM acronym stands for Search Engine Marketing. Beyond that, there is a bit of confusion.
Google is Wrong
Many people – including Google itself in its AdWords Help training for Google AdWords Qualified Agencies (insert link) – will define SEM as paid search only.
SEM is All Search Engine Marketing
SEM, however, is much broader and refers to any way to market products and services through the search engines–including both paid search and search engine optimization (SEO).
PPC Does Not Affect SEO
While lines separating paid search from SEO can sometimes be hard to distinguish, there is no connection between paid search ads and organic rankings. We’re not sure where this theory gained any traction, but Google will not boost your natural rankings if you have an AdWords account (nor will Bing / Yahoo! if you have a Bing Ads account). Think of it as though there’s a giant firewall between the two. That’s not to say buying a link in the Yahoo! Directory won’t help (it can), but that’s a separately entity for Yahoo! search.
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