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My preference having set up e-commerce sites with blogs would be to make it a sub-domain. A lot of conversations have gone on about the sub domain vs sub folder debate. The consensus that I have seen is that it does not matter.
If you want to create multiple landing page style blogs pointing to your e-commerce website that is another option. First I would concentrate on improving your current website before developing additional web properties.
The frequency at which search engines crawl your website is correlated with the frequency of new content. This should pretty much answer the search engine attention issue. If you don't believe it write a blog post every day for 30 days and examine your pre blog post and post blog post numbers for crawlers.
One often overlooked aspect of blog posts is that you can tailor them to low competition product + location specific searches. This offers one of the highest conversion searches plus it is easy to rank because of low competition. Normally it wouldn't make sense to tailor a single product page or e-commerce site page for such low search volume. Since blog posts are so easy to create and the shear number it is a great way to improve ranking for less competitive terms. Plus you can create keyword rich links in your blog posts pointing to the corresponding products.
Having a regular blog has multiple online marketing benefits. When writing blog posts make sure to create links to specific products that relate to your blog posts. If you install a blogging CMS like WordPress you can customize meta information, set up an automatically updating sitemap, and automatically syndicate your blog post to your twitter and Facebook account.
Remember content is king for helping to improve search engine ranking. If your site has a large number of blog posts on topics relating to your products, especially if you use keyword rich links, your search engine ranking should improve.
You also get the benefit of engaging potential and existing customers by providing worthwhile content. This will also increase the likelihood that your website will receive links from people who find value in your posts. You can also submit your blog posts to popular social bookmarking websites to get more exposure.
One thing to remember is that the purpose of a search engine is to find the best resource of information for given words. If you build your blog that is attached to your website, linking to your products as the best resource of information on your products you will have a competitive advantage.
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Last edited by AxionGroup; 10-21-2009 at 02:48 AM..
Reason: expanded information to better address original question and feedback from members
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