At the end of the day, webmasters just need to know their sites: chances are your analytics tool is more like a person than a software package, and will classify traffic in irrational ways. I’ve stumbled across website traffic originating from diverse and confusing sources being classed as direct — often requiring a considerable amount of thought and exploration to work out what is happening.
Paid search advertising has not been without controversy and the issue of how search engines present advertising on their search result pages has been the target of a series of studies and reports[23][24][25] by Consumer Reports WebWatch. The Federal Trade Commission (FTC) also issued a letter[26] in 2002 about the importance of disclosure of paid advertising on search engines, in response to a complaint from Commercial Alert, a consumer advocacy group with ties to Ralph Nader.
Organic traffic, on the other hand, are those visits which are tracked by another entity — usually because they have arrived through search engines — but also from other sources. Hubspot’s definition emphasizes the term “non-paid visits,” because paid search ads are considered a category of their own. But this is where the lines between direct and organic start to get little blurry.
Link building is a catchall term for the practice of creating new external links to your site. Beyond creating great content people want to share, guest blogging and asking webmasters from authoritative sites relevant to your business to link back to your pages are great ways to build links. When possible, use keywords are the anchor text for your links, as this will help send signals to Google that your pages are relevant for those terms.
In 1998, two graduate students at Stanford University, Larry Page and Sergey Brin, developed "Backrub", a search engine that relied on a mathematical algorithm to rate the prominence of web pages. The number calculated by the algorithm, PageRank, is a function of the quantity and strength of inbound links.[21] PageRank estimates the likelihood that a given page will be reached by a web user who randomly surfs the web, and follows links from one page to another. In effect, this means that some links are stronger than others, as a higher PageRank page is more likely to be reached by the random web surfer.
SEO may generate an adequate return on investment. However, search engines are not paid for organic search traffic, their algorithms change, and there are no guarantees of continued referrals. Due to this lack of guarantees and certainty, a business that relies heavily on search engine traffic can suffer major losses if the search engines stop sending visitors.[60] Search engines can change their algorithms, impacting a website's placement, possibly resulting in a serious loss of traffic. According to Google's CEO, Eric Schmidt, in 2010, Google made over 500 algorithm changes – almost 1.5 per day.[61] It is considered wise business practice for website operators to liberate themselves from dependence on search engine traffic.[62] In addition to accessibility in terms of web crawlers (addressed above), user web accessibility has become increasingly important for SEO.

In 2007, Google announced a campaign against paid links that transfer PageRank.[29] On June 15, 2009, Google disclosed that they had taken measures to mitigate the effects of PageRank sculpting by use of the nofollow attribute on links. Matt Cutts, a well-known software engineer at Google, announced that Google Bot would no longer treat nofollowed links in the same way, to prevent SEO service providers from using nofollow for PageRank sculpting.[30] As a result of this change the usage of nofollow led to evaporation of PageRank. In order to avoid the above, SEO engineers developed alternative techniques that replace nofollowed tags with obfuscated Javascript and thus permit PageRank sculpting. Additionally several solutions have been suggested that include the usage of iframes, Flash and Javascript.[31]
Let’s first take a quick look at what organic marketing is and what it is not. Organic marketing is an array of marketing disciplines that create a cohesive and comprehensive approach to inbound marketing. It is using the online search and traffic habits of potential clients to reach them by creating high-quality and high-visibility content for them to consume.

To avoid undesirable content in the search indexes, webmasters can instruct spiders not to crawl certain files or directories through the standard robots.txt file in the root directory of the domain. Additionally, a page can be explicitly excluded from a search engine's database by using a meta tag specific to robots. When a search engine visits a site, the robots.txt located in the root directory is the first file crawled. The robots.txt file is then parsed and will instruct the robot as to which pages are not to be crawled. As a search engine crawler may keep a cached copy of this file, it may on occasion crawl pages a webmaster does not wish crawled. Pages typically prevented from being crawled include login specific pages such as shopping carts and user-specific content such as search results from internal searches. In March 2007, Google warned webmasters that they should prevent indexing of internal search results because those pages are considered search spam.[46]
Clients often ask me the difference and I give them a simple answer that normally puts an end to the conversation and their questions, much like the answer shane thomas gave, but less detailed.  Direct is people putting in your url in the top and organic is people searching for you.  Here is an example: If I want to buy a book i type in (direct traffic) but if i forgot where to buy a book online i search for "where to buy a book online" which directs me to (organic traffic).  When i explain it like this, a light bulb goes off and they understand.  Hope that helps.

Today, organic marketing does not exist in Social Media and in SEO. Even if you somehow manage to rank first on the search results for a specific word, how many resources did it take you? how many resources will it take you to maintain this ranking against eager competitors? your time is money, and many businesses spend way too much time trying to rank for keywords or trying to grow their social media page organically.
The Google, Yahoo!, and Bing search engines insert advertising on their search results pages. The ads are designed to look similar to the search results, though different enough for readers to distinguish between ads and actual results. This is done with various differences in background, text, link colors, and/or placement on the page. However, the appearance of ads on all major search engines is so similar to genuine search results that a majority of search engine users cannot effectively distinguish between the two.[1]