Subdirectory or subdomain?

1000000$ question:

What would be better for SERPS optimization: a subdirectory or a subdomain?
: :

That really depends upon the specifics so please elaborate.

For the majority of situations the answer is Sub Directories.

A new sub domain is treated more like a brand new domain with no weight or authority so it makes sense to captialise on the existing domain.

You can also set specific geographic locations on a sub directory level which can be very useful for a national company targeting on a state by state level.

I think SEO wise you might want to go with sub domains. With the correct back link strategy your sub domains will gather the needed weight from back links and you would end up with your own network of separate back linking sites to power another keyword for either internal or external links.

Use both as appropriate.

A huge advantage of sub domains is that google treats them as separate, so if you optimize well you could conceivably get your site on the 1st page several times. Ideally, if you do this right, you could have all 10 links on the 1st page if someone searched for your domain name. Try searching Google for "google" and you'll see what I mean.

But sub directories are also very useful for having a solid internal linking scheme and passing PR within your site.

So I guess the answer is that it depends.

Why would you want to start from square one again putting effort into a new site instead of putting that effort towards the already established site?

Who's talkin about a established site?