On the results pages of search engines there are two kinds of results. There are the sponsored links (sometimes called 'paid links') and the organic listings (sometimes called 'natural links'). These two have different characteristics.
Many SEO companies devote the vast majority of their time and budget to sponsored listings. This is a safe environment where each action has an immediate and predictable result; to take first position costs x amount per click, taking second position will cost you amount y and so on. PPC campaigns are a matter of finding the right position for each keyword based on conversion rates and budget and ensuring the advert and landing page are ready to maximise conversions.
By contrast, the minefield of organic listings is a strange and bewildering world. No longer can companies buy positions on the results page. Each search engine has different criteria to judge the position of each site and they refuse to reveal their exact conditions. Google is heavily influenced by incoming links but also rates the quality of your site by considering an array of onsite elements. Incoming links are also important for Yahoo, but they also consider a wider array of factors as well. MSN takes particular note of page factors.
In organic listings nothing is guaranteed. A site that is riding high one week can disappear from the first page of listings overnight. The organic listings are forever in flux, and controlled by an inscrutable, exterior force. Google, the largest search engine by searches made, is currently rolling out the 'Jagger update' to refine its results further, and webmasters are either celebrating wildly or crying into their beer as their site's position shoots up the rankings or sinks from view.
Why then would a company devote time, effort and budget into this uncertain game? Simply this; studies show that around 70% of all search engine clicks occur on the natural links rather than the sponsored links on the same page. This traffic, although more difficult to capture, makes up the majority of searches made on all engines. This traffic is just as valuable as the traffic from the paid sites; and companies need to make a serious attempt to bring this traffic to their site.
PPC and SEO are not competing for the same traffic. To be successful in Search Engine Marketing the organic searches and the paid searches need to be correctly balanced.
Travel, Cat Litter and Infidelity
Sponsored vs Organic Listings 
