When an individual or a company owns several domains, there is a tendency to cross-link them in the hope that this will facilitate the process of search engine optimization. The arguments in favor of this inter-linking or cross-linking seem fine – why not let each of the domains help the other through linking, so that the overall performance of all the domains or the websites improve at one go. But as I said, you are wrong because this will be viewed by Google as spam and consequently does not improve your SEO..
Ethics, my friend, will not allow this to happen. Over and again, Google has been trying to make it abundantly clear that there must be some genuine purpose or reason behind link-building. Increasing the number of links artificially just to gain higher rank never receives the approval of Google. In fact, this practice often leads to penalty or punishment.
Incidentally, the issue recently came up in course of a video discussion when Google’s head of search spam Matt Cutts answered a question put forward by a webmaster about linking 20 domains. This probably had amused Matt to some extent, who quickly cut in “First off, why do you have 20 domain names on the same topic,” “if it is all, you know, cheap-online-casinos or medical-malpractice-in-Ohio or that sort of stuff …. Having 20 domains there can look pretty spammy”. Evidently, it would prove bad for your SEO.
Matt never flinched and said “When you have 20 domain names but they are all localized versions of your site and you are linking them, then that would be okay. But even in this case, you shouldn’t link to all these domain names in the footer – instead have flags or a drop down to access them”.
In yet another discussion on the same topic, Matt suggested not to use foot links but to use a country locator page. Since linking to 20 or more different domain names in the footer looks spammy to the Google bots (probably to readers, too), you can have one link in the footer to a country locator page that will pull up a map and display all the different locations. Let the readers click the locations they need and then let that link take them to the other domain. “And don’t forget to keep them normal static HTML”, he insisted.