Search engine marketing (SEM) takes a number of different forms:
Keyword Search Advertising
Advertising based on a keyword search takes place through popular search engines such as google and yahoo. For example, Google offers a service called AdWords, which allows companies, for a small fee, to have a link to their website featured when a user searches a specific keyword which the company specified.
Content Context Advertising
Many search engines (e.g. Google, Yahoo! Search) have partner websites with specific content. The websites agree to let the search engines place content-specific advertising on their website, in return for a fee. The search engine then finds companies interested in advertising on websites with their desired content. For example, an online dog food retailer might have their advertisement placed on a site about dogs.
Both of these advertising formats allow advertisers to target specific users with certain interests. Generally these advertisements are paid for based on either a pay per click campaign or an impression based campaign.
Paid Inclusion
Search engines use computer programs called spiders or web crawlers to automatically discover websites and catalog their content. As this process can take some time and requires a website to be linked to from another website (to allow the crawler to find it), most search engines except for Google provide another channel to be included in search rankings via paying. This is different from pay per click advertising because the inclusion is guaranteed but not placement.