We are so glad this question recently came up. Recently we started working with a client who had registered about 20 different domains throughout the past few years, all of them linked to one another as well as back to their main site.
Right away, this raised some red flags for a number of different reasons. The video below by Matt Cutts basically says that there is really no good reason to even have that many domains, unless you have different domains for different languages or country versions.
Buying domains for the purpose of increasing your site’s SEO value falls under the Google Webmaster Guideline of a link scheme.
This is definitely something that we do not endorse, or recommend for anyone who is looking to receive long term gains from their SEO.
Aside from that, could it work? Maybe. Will it get you penalized? Quite possibly.
Its all about the risk vs rewards. For any brand site that cares about the future of their website, it is definitely not a play you should make.
We're glad you stopped by. We blog about SEO to contribute to the community, and to help educate those looking to learn more about it.
Part 1 - An SEO's Guide to Tumblr
Part 3 - The value of Tumblr links revisited