Thanks, Nakul.

I very much appreciate your comments and insight.

Cheers - Axel

Agree. Apparently domain authority and trust does not pass 100% to a subdomain. I've searched thru SEOmoz high and low and cannot find this issue being adequately addressed. (???)

But check out this Sept 2010 post by webseo: www.webseoanalytics.com/blog/multiple-domains-vs-subdomains-vs-folders-in-seo/

"WebSEOAnalytics.com team has done extensive analysis in the past on the Data that we collect from the reports of our SEO tools. Based on those data there are strong indications that a part of Authority and Trust passes to the subdomains only when the domain has a small number of subdomains and when the link structure of the main website passes enough link juice to them. "

And this post on Google Webmaster blog, suggesting that links between a subdomain and a domain are essentially seen as "internal" links.

So maybe there is some advantage passed from domain to subdomain?

I would surely love to see Rand or one of the other experts at SEOmoz give their take on this issue.

Thanks EGOL and Nakul. Agree, a subfolder would be the best solution. Unfortunately we cannot do the subfolder approach. The sites use completely different platforms/ CMS, and so the options are either subdirectory or completely new domain.

The problem with a new domain is that there is no transfer of domain trust or authority from the existing site to the new microsite. It is a painful, slow, long-term building process. It seems that with the recent Matt Cutts announcement on Google treatment of subdomains, many SEOs are now suggesting that some of the root domain equity does indeed transfer from root to subdomain.

And it actually makes more sense from a holistic user and SEO perspective to use a subdomain. The two offerings are linked from a product category perspective, with one targeted at the needs of the small business user (hence different products, messages, and look & feel), and one targeted at the traditional corporate user. No duplicate content, yet intrinsically linked. I also think that small business users will look at it positively as they see that a "strong, established brand" is behind this targeted product. I have to think that Google (and other SE) algorithms, which are trying to more and more mirror human preferences, would see the subdomain/ domain linkage as positive.

Am I "off-base" with my thinking?

We have an existing large site with strong, relevant traffic, including excellent SEO traffic. The company wants to launch a new business offering, specifically targeted at the "small business" segment. Because the "small business" customer is substantially different from the traditional "large corporation" customer, the company has decided to create a completely independent microsite for the "small business" market. Purely from a Marketing and Communications standpoint, this makes sense.

From an SEO perspective, we have 2 options:

1. Create the new "small business" microsite on a subdomain of the existing site, and benefit from the strong domain authority and trust of the existing site.
2. Build the microsite on a separate domain with exact primary keyword match in the domain name.

My sense is that option #1 is by far the better option in the short and long run. Am I correct?

Thanks in advance!