I came across this nice write up on multiple sites by Michael Martinez. Because I wasn't logged in, thought I'd add my own $0.02 over here.
I agree 100%!
Okay, I'll go back a bit. Is having multiple sites for a business a bad thing or a good thing? Well many would argue off the bat that multiple sites instantly equal blackhat tactics. That multiple domains are a spammers delight.
I argue that point, and think Michael does a good job of pointing out why, once again, it's not what you do but how you do it. There are always bad ways of doing anything. Cloaking, is it good? Bad? How about IP delivery? That good or bad? It's the implementation and intent that's really the question.
I've often suggested several smaller sites instead of one site for new clients. The benefits of properly interlinking these sites is immediately noticeable. In addition sometimes you can really break a service, or group of services into separate sites. Each then becoming more focused while adding the the value of a whole.
While generally I'd only suggest this to new sites/clients while avoiding it with older more established sites, it's certainly a tactic that works.
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