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Interesting distinctions. I guess I misunderstood the term SEO when I first heard it. If optimization refers to rearranging your content so that search engines can parse it more easily, then I can see where you're coming from. I thought it referred only to the end result, i.e. improving your site's rank. Thanks for the correction.

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You're right in your definition. SEO (search engine friendly design, link building, etc.) is a subset of SEM. SEO is about improving your organic (non-paid) search results. SEM generally refers to a combination of SEO and PPC (pay-per-click) advertising, and other online marketing methods.

That said, I think things like the 37 signals post are too easily classified as SEO when it's really just publicity seeking with no real intent on improving the sites rankings.

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