Search Engine Marketing (SEM) is a form of paid search engine listing (see the figure above, on the top right section). SEM is an advertising program, in which you bid against your competitors to rent the advertising space. Depending on your industry and how competitive your market is, the cost can be as high as $50 per click! The more competitive your market is, the higher the advertising rate (lead acquisition cost).
On the other hand, Search Engine Optimization (SEO) is a form of online public relations and technical wizardry, where you are ranked as the most relevant site when potential customers search for a product or a service using related keywords. It is also called natural SEO or Organic SEO. Achieving better web placements in such a globally competitive market requires exceptional technology expertise, marketing knowledge and creative skills.
The SEO cost is fixed, so after the initial investment is set, all your traffic is free. The best part is that your traffic can grow exponentially (no limit) without having to pay for each click. Your customer base grows while your marketing budget remains the same. The key challenge for all companies is that SEO technology and marketing is very difficult to master and the internet websites keep growing and content keeps changing, so very few companies have the necessary expertise to rank your website higher and maintain its ranking.
Can a company guarantee first place ranking for all my keywords?
No company can guarantee first ranking for all your keywords. Google, MSN, and Yahoo spend tens of millions of dollars to develop and protect their ranking algorithms. A company that advertises such guarantees will face huge trouble with the search engines. Additionally search engines keep changing their algorithms every few months in order to protect against reverse engineering efforts. On the other hand, an expert SEO firm will have enough track record to show consistently higher ranking for their clients (for example top 10 results).