Search Engine Optimization (SEO) – Optimizing your website and products (by adding keywords, etc.) to make it easier for Google and Bing (or any other search engine) to find them.
Search Engine Marketing (SEM) – Spending money to get your website or products found on search engines at the top of the search – common terms for SEM you may have heard are Pay-per-Click (PPC), Google Adwords and Keywords.