As previously mentioned, the term SEM used to encompass SEO. Now, though, SEO is its own thing, and SEM refers only to paid search.
SEO, or search engine optimization, differs in that you don't pay a search engine to rank you higher. Instead, you use a variety of different strategies to organically raise your website
higher in the rankings.
Search engines use keywords to track and target what people search for. The popularity of certain keywords will cause websites containing them to rank higher. This is one of the core strategies of SEO.
For example, if the keyword 'SEM Singapore' is getting a ton of hits, businesses that have 'SEM Singapore' appearing in their copy will rank high in the results. However, the more competition there is on a keyword, the harder it is to rank for it.
In addition to keyword research, SEO involves link building and improving the content and function of the website. A good chunk of SEO is dedicated to ensuring you have a well-designed website
that loads and responds quickly.
Basically, SEM involves paying search engines a fee to display your ads high in the ranks. SEO involves employing tactics and strategies on your own to rank higher without having to pay.