I've been adding quite a few blogs to sites and I'm wondering if it's better to add blogging software on the site or use an external blogging service. The major reason I can think of adding a blog to site is if you want to customize it later on (other than look) such as more integration with the site. If I put it on the site, I'll probably use WordPress as I'm familiar with it.
Is there any major advantage to one method or the other?
I would go with putting the blog on your website itself. This will help with a number of things:
Transparency: Your users will feel as if they are on the same website, because they in fact are. Your blog will become simply an extension to your website. On the other hand, a blogging service will most likely appear as though you are going to a completely different website.
Integration: You are able to integrate everything on your website with your blog. This includes any existing user bases, or future ones. Also, the look of your blog can match your website perfectly, much more so than with a blogging service.
Customization: You get 100% control over every single feature of your blog. If you want some new crazy feature, you can program it. Blogging services are typically much more closed than this.
The downsides will be that you have to maintain it, and any features that you want you have to put in yourself.
It's not cut and dried:
(Assuming this is for clients) do you have an ongoing relationship with the client and time scheduled for upgrades? Most blog software needs at least some upgrading or security patching from time to time.
Are you relying on some sort of social media network effects from these blogs? If so, you may get better mileage from a hosted product as they often promote related sites within their networks (e.g. Wordpress has the "Possibly related posts" feature).
As Brian said, integration could be an issue if you have other areas of your site that rely on logins. In that case, probably better to host it yourself.
One of the advantages of having blog on your site is that all the content will belong to your site, which is good for search engine since it will increase your site visibility through SERP. But you will have the price to pay: installation and maintenance.