If there is one area on the Web that is often overly abused, this is it. There are several factors that make this a dangerous strategy. Let's start by outlining the tremendous amount of work that would be necessary to build, maintain and achieve a high ranking for, let's say fifteen websites rather than one only. On top of all that, let's not forget the cost of the domain names themselves which some, in certain cases, can be expensive to begin with.
Yahoo now charges US $ 299 per year per website just to have it listed. In this hypothetical case, you would have to pay to register and host at least fifteen new Web domain names. Since many Internet search engines and directories actually penalize mirror sites, you would have to spend time building fifteen different web sites. Additionally, you would have to pay to host those fifteen Web sites.
You would also have to spend time, actually many weeks just to optimize the same fifteen web sites. You would then have to spend more time submitting fifteen independent web sites (very time consuming). You would then have to build link popularity to each separate web site. You would have to start doing some reciprocal link exchange trading with quality sites that are in a similar and related sector to your actual field of expertise. If you are starting to think that this sounds like a lot of time, effort, energy and expense, you are 100% right.
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Instead, consider this: your other option is to do all of the above, but just to only one site. Now, you may be willing to put in that extra time and expense if it means more chances to rank well in the search engines. The thinking behind this strategy is that you could buy fifteen keyword domains and focus the content of each site so narrowly that it will rank very well for a few terms. Experience has taught us that, in reality, it doesn't even come close!
Webmasters who try to use this strategy find themselves doing fifteen times the work, and rarely, if not ever, getting the results they would have if they'd simply put all that effort into one single domain to begin with. We like to compare this to the straight-line principle: the shortest distance from A to B is still the straight line. Why won't all that extra work translate into extra rankings? Well, there are several reasons. Depending on the actual content that you place in these domains, search engines and directories would flag them as mirror sites and refuse to list them. You will spread your incoming links (and therefore link popularity) across multiple domains. This will keep any one of them from ranking as highly as your main domain would if all the links pointed at it.
You have less ability to cross-sell and up-sell the products that you have listed on one of your extra web sites. A visitor may not realize that you offer blue widgets as well as green widgets. As a general rule of thumb, larger sites nearly always outrank smaller sites. It's going to be difficult to compete with a company that has a two thousand page web site when your keyword-rich mini-site only has ten pages. Think about sites like Yahoo! and Amazon.com or eBay. They clearly have more than enough information to warrant dozens and dozens of smaller sites, yet they choose to house all of these areas of content under their main, single domain name.
If you have multiple products or services to offer, make sure that everyone that comes to your site realizes it! Don't undermine your chances of success by hiding your content on separate domains in an attempt to artificially improve your rankings. It just won't happen. What will happen however is that you will probably make things a lot worse for yourself and your Web site could get penalized. Sometimes, we often wonder ourselves if some engines do adopt an updated "blacklist" of Web sites that have a habit of using illegal and unethical practices and/or that have done so in the past. Some in the industry even believe that, if ever that "blacklist" does exist at all, it could be circulated, probably by email to the other engines.