There has been some chatter over the last few days regarding an announcement made by Matt Cutts at the WebmasterWorld conference regarding how Google has changed the way they are handling subdomains in the search results. The change that was made basically makes it so subdomains of a site (for example auto.insureme.com) would be handled similarly to subdirectories (for example insureme.com/auto) in the search results – meaning there can be only two listing per site showing up in the search results for both subdomains and subdirectories.

I’m guessing this has a lot to do with some online marketers using subdomains to dominate particular search results, which in Google’s eyes, reduces search quality. Makes sense, but it brings up this question – if you are an affiliate trying to rank well in natural search, when should you use subdomains or subdirectories (a.k.a. subfolders) or just build out separate domains?

Based off of the following quote from ex-Googler Vanessa Fox, it sounds like we might have an answer:

If you have completely separate topics, consider creating separate domains. In most cases, you’ll want to stick with a single domain, but there are times when multiple domains make sense. I’m thinking of starting a social media blog, and I’ll likely start it as its own domain rather than as a subfolder of my existing one.

Generally use subfolders to organize your content, as it’s much easier and is treated in a very similar fashion by Google as subdomains. Try to create a flat subfolder structure and don’t create a complicated hierarchy that goes down too many levels.

Use subdomains when you have very disparate content that you feel searchers would feel relevant. For instance, videos are very different from articles, so it may make sence to separate those into subdomains. If you have a travel site, it may make sense to use subdomains to categorize cities. Someone searching for a particular resort may want to see the various locations that reort is located in.

Vanessa does an amazing job digging into this topic in her Search Engine Land column…make sure you check it out.