SEO, short for search engine optimization, is one of the original methods of driving traffic to a web site. The goal of search engine optimization is to get your web site ranked in the top of the search engines "naturally." Natural SEO means you will never need to pay when someone clicks on your site.
To see the difference between natural rankings and paid rankings do a quick Google search for a phrase like "weight loss." The companies that are listed on the top and to the right labeled "sponsored" pay every time you click on their ad. The sites below those are there naturally.
While SEO is a good long term strategy it takes quite a bit of time (months to years) to get ranked for some of the more popular and more trafficked search phrases. Weight loss for example is a very competitive phrase. If you're selling a weight loss product, it is going to take you quite a bit of time (and money) to get ranked for a keyword of that caliber. Some people prefer to use other methods like pay per click or web 2.0 strategies to supplement their traffic until they achieve some top natural rankings.
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