A directory is a compiled list of information which has a logical structure you can search through to find relevant pieces of information.
In search engine marketing, a 'directory' is not the same as a search engine. There are two key differences:-
1) A directory is edited by humans - not by software.
2) With a directory you follow a 'tab' structure to find your way progressively to the information you seek - a telephone number in a telephone directory for instance. You choose the directory for the right area, you search by alphabetical name, then by initial and finally by address until you are confident you have selected the right number. Metaphorically speaking, the same search in a search engine would try to deliver you to the right number in one go!