Let’s start by defining each:

SEO or search engine optimization is the practice of improving a websites opportunity to be listed in a search engine’s organic listings. This practice is done by considering a number of factors by which the search engines may rank and view your website.

SEM or search engine marketing is the practice of promoting and marketing a website through paid listings (advertisements) on search engines. This practice is done by PPC (pay per click) or CPM (cost per impression) typically and your website listing is shown via search queries using “keywords”  that  trigger your ad to be shown.

They each have advantages and using both methods will increase your traffic however SEO is free and SEM is paid listings.

When to use either?

You will want to always include search engine optimization to the fullest extent that is possible because the ROI on good SEO is long lasting and with time will result in higher ranking for organic search listings.

If you have a brand new website be sure your web designer or company is optimizing your website for the keywords you wish to place highly for and if your website is already online, review and further optimization is always possible.

The key to SEO is keyword recognition throughout your website using different means of html, content and linking. There are many other factors as well that you can do on the website itself and off the website which will help it rank well.

The best use of SEM is when you have an exact market you wish to reach and believe that exposure to this market via a website visit will result in a measurable form of conversion (a phone call of interest, product sale, branding, email capture etc). By knowing your market and determining the keywords they may use to find what it is they are looking for, you are able to provide paid links to your website. Through optimization of your SEM campaign you will be able to focus on the best use of your money by determining the most attractive ad combinations that attract the highest converting visitors to your website.

Recap:

Always use SEO methods but also use SEM when getting visitors to your website will result in conversions, measure those conversions, optimize, manage your bids to improve them and then your SEM campaign will more than pay for itself.