Use Subdomains to increase SEO
Not many people know exactly how the search engines treat the subdomains when it comes to website building and SEO. Research has been done, and the theoretic conclusion is that search engines handle subdomains as totally different domains.
That's why the use of subdomains should be handled with care and knowledge, during the website design process. They can be used to help in page ranking, but they also can damage the SEO for the main website.
Let's see how:
More than one appearance in SERP (Search Engine Result Page) bring more traffic to your website. But usually Google doesn't list more than two appearances of the same website on SERP in order to increase diversity and to bring us quality results. Google loves relevance and it also offers it.
So it's less probable to get more than two results in SERPs from one domain. For more results you need more domains, and this is where the use of subdomains can come in handy. The subdomain is treated as a different domain, and if it is optimized for search engines, will bring you up to two more results on SERP, increasing the traffic towards your main domain. So a blog subdomain with the same website and link structure as the main website it's a good step towards increased SEO. You can read more about Blogging for SEO in the post: "The most important step in Search Engine Optimization".
You can have a website for your business which its let's say home renovations and you like to blog about fishing, your hobby. If you create a separate directory for your fishing adventures blog, Google will crawl it and index it as part of your main website and might bring it in SERP at searches for "fishing", canceling the results for your business keywords which might be "home renovations expert". That's when you need to create a subdomain for your blog in order to keep it from messing your main website SEO. In a case like this also make sure you don't put any links for the subdomain on the main website.
There are strong indications that a part of Authority and Trust passes to the subdomains only when the domain has a small number of subdomains and when the link structure of the main website passes enough link flow to them. An additional factor can be whether the subdomain keeps the same website and link structure as the main website. On the contrary, when the number of subdomains is too great (ex: blogspot.com) and when there are no links pointing to them from the main domain, then no authority or trust is inherited.
The most straightforward and safe solution is the use of Folders, because is simple, easy and there is no special coding needed to handle separate folders. The website building will be more organized and efficient, and easier to maintain and update. Multiple subdomains usually means that you have additional parts of the website that need to be handled separately. For instance we have a few subdomains where we put the websites that are in testing. We don't want those websites SEO to influence in any way our main site SEO.
In conclusion, the use of subdomains can always be beneficial for your site as long as you have a clear goal in mind a good plan to use them. If you feel uncomfortable, use folder and you can't go wrong with them. If you have enough content and resources go with multiple domains and get more traffic. In the end it's your choice.