Here is a short list of common terms with my version of their definitions and in their hierarchical structure.

Online (or Web Site) Marketing: I think a case can be made that online marketing and website marketing are two different functions, but only slightly. However with the advent of pay-per-call it will be entirely possible to market your online without even having a website. Not sure if that would be advantageous or not, but possible. I place a distinction here between online marketing and search engine marketing because the functions of online marketing , while including search engine marketing, may bypass the search engines altogether.

Examples: email marketing, link buying, renting or exchanging (when done for exposure, not search engine relevance), online ad placement, website design, usability, conversions, etc.

> Search Engine Marketing: SEM is the primary subset of online marketing and focuses its marketing efforts primarily to gain additional web-site exposure via the search engines.

Examples: SEO, Pay-per-click, press release distribution, link building (all forms), keyword research, traffic analysis, etc.

> > Search Engine Optimization: SEO is the act of manipulating a websites on and off-page factors causing the search engines to recognize the site as relevant for specific keyword phrases. The primary function of search engine optimization is get a website ranked, drawing new traffic to the website. What happens once they get there is, by the strictest definition (and one employed by most SEO companies) is not under the purview of the SEO company. Usability and conversions are both functions higher up the chain.

Examples: code and text optimization, keyword research, link building, ranking reports, etc.

Many of the jobs that need to be performed can cross each into other categories. For example, keyword research is the function of SEO and SEM, same with link building. It is important, however, to recognize the distinctions in each of these categories. While everything an SEO does is considered a function of online marketing, if you hire an SEO or purchase an SEO only service, dont expect to receive search engine marketing or online marketing service with that. And if you do want those services included, be ready to pay substantially more for the service.