Under most situations the optimal architecture for a blog is to use either a subdomain or sub folder structure. There are additional factors to consider from a security standpoint (tk), but a in most cases these concerns alone don’t warrant a stand alone domain. However there are a few outlying conditions when a blog running on a separate domain makes the most sense.
When your company or your client, is engaging in an reputation management project, using a separate domain is one fool proof way to gain an additional listing in a SERP. In most cases this will be used to rank for the company, or an executive/employee’s name. This is very similar to a microsite strategy, so be sure you are aware of the pro’s and cons of this course of action.
In some companies any information that is published on the website requires an onerous level of review before publication. In extreme cases, advertising, legal, and executive level approval are required to publish. This just isn’t conducive to good blogging which has a much more off the cuff feel, and publish in the moment lifestyle to be effective. So creating a blog that doesn’t hide it affiliation with the parent site, but exists as outpost can be effective.
A third reason to have a blog on a separate domain, is customer expectations. If having the blog on the main URL would would severely distract visitors from entering the conversion funnel. If the company/brand is well known and the primary goal of most of the visitors are to complete transactions, there might be case for a separate domain. The company/brand would have to be really strong and not need any of the SEO benefits for this to be the case.
Some good examples of company blogs that exist on their own domain are:
Special thanks to Search Engine Marketing Group who’s post on “When SEO Advice Goes Wrong” was the inspiration for this post.