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Patrick Mackenzie, of Bingo Card Creator fame, uses what I'll call micro-sites to dominate certain keywords.

For example, search for "halloween bingo cards" and you'll see the first hit is http://www.halloweenbingocards.net which is a micro-site of a few pages of halloween specific content about bingo cards.

If you search for "bone bingo cards", you get a link to his main site with one page of content about bingo cards and the human skull.

He owns the long tail on basically X + bingo cards, but went all out to build a custom site for the halloween bingo card search (note, the domain name almost guarantees this as a first hit in search results).

If you had a bunch of long tail content sites, how would you figure out when it makes sense to pull one out and make it into it's own standalone site at a different url?

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Importance. Halloween and Christmas (yes, he owns that too) are large scale events and deserve additional focus as more people participate in them and are more likely to use them in keyword searches. This is opposed to bones/skulls which are more niche.

As rankings get more competitive in the important spaces, the domain name may be the factor that pulls your site ahead.

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Then the answer to your question is "whenever you want to compete for those keywords". –  John Conde Oct 11 '10 at 19:37
    
You always want to compete for keywords. But some competitions are more important than others. Hence, the added microsites (or so the theory goes). –  webbiedave Oct 11 '10 at 20:30
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I wouldn't do this as it is unnecessary. For long tail search terms there's going to be so little competition that getting a special domain and building a whole new website for it is overkill. If you have pages optimized for those terms they're going to rank well anyway without having to go through the hassle of setting up a mini-site just for them. Besides, such long tail terms are going to deliver very little traffic anyway so why go through that effort for so little reward? Having them as subpages of a larger site will reap the same rewards with virtually no extra work. If you have a bunch of related products like his just put them all on one site, link your pages together liberally (but correctly), and promote them normally. You'll do just fine in the SERPs without the unnecessary overhead.

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+1 Because it makes no sense to devote most of your effort to what 20% of the traffic goes to. The Wikipedia entry for "long tail" deserves mention: en.wikipedia.org/wiki/The_Long_Tail –  danlefree Oct 11 '10 at 18:58
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