If you are only concerned about rankings, SEO is the only option. SEM won't help you rank higher. Sure, you will have traffic and can build links that way but it's an indirect way as opposed to SEO.
I see SEM as a rather broad term. It's everything that can be done to utilize the technology of search engines with the goal of promoting a web site and increasing its traffic and in the case of sites that promote a business (or are a business), increase profits. SEO, therefore, would be a subset of SEM.
how come you say seo is not marketing? where have you read that? SEO is one of the basic components of marketing nowdays and the basic terminology is learned in all the marketing classes around the world.
Very simple in SEO we depends on free of cost link placement and we just need to hire an SEO Expert to run this campaign and in case of our SEO expert work on paid ad placement.
If you work for both, it will be the best. But remember that SEO must be your first step in promoting your site even though your spending money for your advertisements. That is why no SEM campaign is effective without SEO.