An interesting question was posed to me this morning via Twitter from a local social media maven, Melonie Gallegos.
What gives a domain more SEO benefit (link juice): a subdomain or a folder under the primary domain? xyz.domain.com vs domain.com/xyz
This is a difficult question to answer in 140 characters, thus, here I am writing the post. Thanks for the inspiration @melonie! From a pure SEO perspective it really does not matter. You can have the same amount of success with either subdomains or subdirectories, if you use them correctly. This is especially true since Google announced earlier this year that they would be treating subdomains as part of the root domain.
You see, in the past a subdomain was essentially viewed but Google as being a completely different site, independent from the root domain. It had its own link profile, which was a huge benefit SEO wise, and yet it would still absorb authority from the root domain in a similar fashion as subdirectories would. This made it easier for subdomains to rank and rank faster than building entirely new domains. If you had a strong root domain you could throw up a subdomain and link to it strategically and get it ranking in a fairly short period of time, especially if you made the subdomain keyword rich and relevant to the root domain. Google’s change was a direct response to this fact. This technique was being abused for years and many subdomains were a bit spammy in many people’s opinions.
I do not recommend using SEO as a main determinant in whether or not you use a subdomain or subdirectory. You need to think of the user first and if it makes sense to use one over the other. Some people use subdomains for different country and language versions of their sites, especially since they sometimes host the subdomain in the country of origin. But Google now allows sites to specify geo location for subdirectories to that is not necessary any more. But if you have distinctly different sections or audiences to cater to then it may make sense to use a subdomain over a subdirectory. Many companies put secured, client or vendor, login (https) sections of their sites on subdomains. Or if you have a directory for your vertical, you may want it on a subdomain.
So at the end of the day it just depends, not on your SEO goals, but on your users and your content. The best advice I can give anyone is to work towards appeasing your visitors and providing them with a useful and smooth experience. Make that a priority and you should be very successful.