Often they are used to easily hold content on another server. In addition, they are a more semantic way of describing a separate entity within your organisation.

green.example.com and red.example.com are probably poor ways to use subdomains; but medical.example.com and audio.example.com is a good way to assign URIs within a company with diverse sub-units.

example.com/medical and example.com/audio would confuse things from a search engine perspective as you would be mixing unrelated topics on one website.

So it's purely technical considerations?

It dilutes incoming link 'power'

Not really, keep reading...

Confuses visitors and doesn't appear to offer any marketing value whatsoever.

Ah, I think these days sub-domains are more common than they were let's say 10 years ago. If visitors get confused, there are ways around this, stuff that needs to be taken into consideration prior to moving into a sub-domain structure.

Oh, they have lots of marketing power if done right. Short single word sub-domains are typically the best option for marketing purposes. Actually, they are the best option all around.

Sub-domains are treated as "separate entities". A sub-domain sits one level above the root. A sub-directory sits one level below the root. Ever do a search and find multiple results from one domain? And, those results are coming from various sub-domains within the one domain? That should give you some indication of how powerful they are.

Sub-domains are not for everyone. It takes a bit of work to set things up properly for a sub-domain environment, especially on Windows, I know! I do know that the next "big site" I build will use a sub-domain structure, its only natural. If you have 10 distinct and totally unrelated categories, you probably qualify for a sub-domain structure.

Watch out! Sub-domains have also been known to cause issues for some. If you were to run out today and start 301'ing your sub-directories up to a sub-domain, its not as simple as that. There are all sorts of technical challenges to take into consideration before you even think about sub.example.com.

You will also see it used in PPC ads to give more relevancy and higher conversion especially for affiliates.

We have customers who use subdomains for their stores. If you have an online store, you really need to get a PCI compliant host to protect credit card data. If someone wanted to host their own site but not deal with the expense of PCI compliance, they could use a subdomain for their store, host that part with a PCI certified shopping cart company, and then they wouldn't have to deal with the compliance audits for their site.

Hey bouncybunny:)

From the information i've read, sub-domains are viewed as "individual websites". They are great as far as marketing is concerned. For example, have you ever run as search for blogs? You will see how several sub-domains pop up in the results.

Hope that information helps:)

Frenzy

I use them, rarely, to put up a website that I don't want to go as far as buying a new domain for. For instance, a hobby website for a local club that I set up for them as a favour.

On the other hand, I think it's also a legitimate use to put up a subdomain when you want to put up a new website that retains the branding, trust and affiliation of the main domain. For instance, you would know that news.bbc.co.uk definitely has something to do with the BBC, whereas if they used bbcnews.co.uk or something similar it would be harder to tell which services are legit and official, and which ones aren't.

So you have two sides to subdomains: lending the authority of the main domain on the one hand, and saying "this is not really important enough for its own domain" on the other.