Should you or should you not use sub domains for you new site? Right off the top, personally, I say no. Some believe it’s a great way SEO and rank high on your keyword. Here is a quick overview of the pros and cons.
Subdomains over Folders
Subdomains are inexpensive and allow you to target the exact keyword you’re looking for. If I wanted to target the keyword ‘web hosting’, I could add a sub domain to my site making it web-hosting.monetizers.com. The search engines will see the keyword ‘web hosting’ and factor that into the SEO Ranking equation – almost as if you owned a domain such as web-hosting.com (this is because the bots see the first part of the url as the most important section).
The negative (and a big one at that) is many SEO experts are using this to spam search engine results. It’s speculated that search engines are and will be giving this less weight to reduce the amount of spam in their results.
Domain names are still important, so it would be better to purchase a domain name such as web–hosting.com (everyone seems to forget about the –!) rather than create a subdomain. Subdomains do NOT receive any benefit (such as pr) from their parent domain.
Also a negative is that subdomains sit on the same IP address, so if one site’s IP gets blacklisted, so do all the rest!
And last, a subdomain makes it easy to forget that engines see it as a separate site; this means that you may end up placing more then 4 links between sites and end up penalized for cross linking! A very costly SEO mistake!
Folders over Sub-Domains
Folders are the way to go if you want to leverage the power of your site (PR, Inbound links,etc). Cross linking is not an issue with folders as they are with subdomains.
New Domain vs Subdomain
Both a new domain and a sub domain start off the same. New domains usually have a different IP address and are given high priority on some engines (at lease for a couple of weeks). Better to stick with a new domain name.
In summary: Stay away from sub domains, folders if you want to leverage your ranking and a new site if you want to really target keywords.