Hyphens or no Hyphens in My Domain Name?
This is also a long disputed discussion in the search marketing community. Technically hyphens are recognized as a separator (or space), so they should be used in instances where search engines may not correctly discriminate your keywords. For example, expertsexchange.com - is that experts-exchange or expert-sex-change? In all other instances hyphens are unnecessary, as search engines will correctly parse out the keywords.
Not that that matters though, as Google largely ignores the content of your domain name (upon further investigation, we are finding that they keywords in your domain name play a larger role than we expected, especially for low competition keyword phrases). Either way, you should focus on the branding aspect of your name - ie. stick with one that is short, simple, and easy to remember, as that will pay off most with your visitors in the long run. Remember - cater to your visitor first, not the search engine. Read our article on Keywords in Your Domain Name for details.
Word of Mouth Marketing
There is one undisputed argument for non-hyphenated domains. And that is when you are marketing your domain name by word of mouth. It is much easier to tell someone to go to "guru of search dot com" than it is to try and get them to remember "guru hyphen of hyphen search dot com" Chances are they will forget the hyphens, insert them in the wrong place, or not know what a hyphen is to begin with. To avoid this confusion, it is recommended to either begin with the non-hyphenated domain, or have the hyphenated domain redirect to your non-hyphenated domain. That being said, if you market your non-hyphenated domain and people store links to it, your hyphenated domain will lose out on that link popularity.
The Myth of "Hyphen Dropoffs"
Many people have reported that they are seeing drop-offs in rankings of their hyphenated domains in Google SERPs (Search Engine Results Pages). Upon further inspection, however, the drop-offs are also being realized by hyphenated domains. The bottom line is that Google is constantly updating their search algorithms, so your page rankings will vary day to day, and often pages will be dropped from the index. But this has nothing to do with hyphens. Just imagine the risk Google, or any SE for that matter, would run if they penalized hyphenated domain names that ended up being high quality sites. A simple, crude filter such as this has nothing to do with distinguishing quality content - and the complex Google algorithms have been refined to a development point that is far beyond this.
The Myth of "Non-Hyphenated Search Results"
Others argue that most top results reveal non-hyphenated domains and therefore non-hyphenated domains are better. Of course the results are going to reveal more non-hyphenated domains. Why? Because it has traditionally been the convention to obtain non-hyphenated domains, so the majority of sites use these - hence the majority of results contain non-hyphenated domains. The simple fact the the SERPs also contain several quality multi-hyphenated domains is evidence that these domains are not being penalized. The bottom line is quality - sites will quality content organized in quality fashion (see SEO Site Structure) rank well, regardless of domain name technicalities.
The Myth of "Non-Hyphenated Popularity"
There are those that believe that people are less likely to click on hyphenated domains because of their association with spammy sites, and because long-lasting traditional domain names tend to be hyphen free. We're not aware of studies having been conducted on the influence this has on current search patterns (please comment below if you are), but so if this is an issue for you we suggest you go with a non-hyphenated domain name if possible.
The Fact of "Hyphenated Spam Domains"
Others will point out that multi-hyphen domains are rapidly disappearing from SERPs. This is no doubt the case - because of the fact that the hyphen-separated keyword domains have been used by spam sites. The reason they are disappearing is not related to the hyphens, however - it is the spammy content and poor quality of the sites. The fact that many of these sites use hyphens does not mean that the penalties are resulting from hyphen use.
Hyphens or Underscores?
If you are in a situation where you must use hyphens to differentiate keywords correctly (as in the above example), then it is important that you use hyphens, and not underscores. While Yahoo and MSN may correctly interpret underscores as hyphens, the predominant search engine, Google, does not (ie. it reveals different results for hyphenated and underscore searches, treating the underscore as a character instead of a space).