Previously posted in 2011 and updated.
What’s the best way to organize your web site for SEO factors? Is it sub-folders, sub-domains, or something in between?
What’s Best For Your Web Site? Subfolders or Subdomains?
Simply put, there’s no one size fits all approach to this, it’s dependent on the needs of your users. You should always create website content, and organize that content, with the end user in mind. If it makes more sense in terms of clarity to add subdomains on the website instead of subfolders, then do so.
For example, do you have one parent company but multiple locations? Sub-domains for each geographic location retains the brand and also makes it clear you’re in a different part of the website (the design has to reflect this as well). Do you have one store but multiple related products? Using categories in subfolders would be the most natural.
In terms of SEO one of the major things you should look out for is the treatment of subdomains. Subdomains can be treated like their own unique website. That means two subdomains would largely need their own unique linking campaigns (so you double the required investment). With sub-folders (www.test.com/sub-folder/) you do all the promo for 1 site and all folders benefit in a trickle down effect. All in all, make your choice based on the existing structure of the company and your end user. This is also a question of navigation for your users. See https://googlewebmastercentral.blogspot.ca/2011/08/reorganizing-internal-vs-external.html for how Google will treat your domain.
You may naturally insert keywords where you can, maybe use the date or year if it’s relevant, and then away you go. Make sure you do the work beforehand so you’re not switching out a year later. Continuity is important so be sure with what you choose. Clear and concise navigation and URL structures is for your users and is your goal in choosing website structure.