Based on this post from 2009, it's recommended in most situations to set up a microsite as a subdirectory as opposed to a subdomain. http://www.seomoz.org/blog/understanding-root-domains-subdomains-vs-subfolders-microsites.  The primary argument seems to be that the search engines view the subdomain as a separate entity from the domain and therefore, the subdomain doesn't benefit from any of the trust rank, quality scores, etc.  Rand made a comment that seemed like the subdomain could SOMETIMES inherit some of these factors, but didn't expound on those instances. What determines whether the search engine will view your subdomain hosted microsite as part of the main domain vs. a completely separate site?  I read it has to do with the interlinking between the two.