Hi
In internet we use all strategy seo,smm,smo,sem, ppc all.
SMEs have a different kind of requirement they have done some kind of marketing in either online or offline space or both
Internet marketing is also free bceasue is only submission like directory, local listing, forum post etc..
SEM is the marketing process with a goal of getting more visibility in search engines either by getting more free traffic (SEO) or paid traffic (Paid search advertising).
SEM is a form of Internet Marketing.
The difference is that Internet Marketing is a branch of Marketing while SEM is just a niche of Internet Marketing.