Using Subdomains to Avoid Sitewide Penalties?
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If I'm using a subdomain on my website, for instance news.mywebsite.com, and it gets penalized by Panda (or whatever animal update), would that affect the main domain and/or other subdomains?
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It depends, in part, on whether what you're seeing is a manual penalty or an algorithmic update that is causing your site to rank lower.
Often times with Penguin updates, what looks like a penalty is actually just that a lot of the links pointing to a site have been devalued and are no longer passing juice. This is definitely something that can affect your whole domain, if there are enough inbound links to enough different pages on your site that have all been devalued. Subdomains won't be immune to this effect. However, as Michael points out below, losses from Penguin are usually more page/keyword specific, so you won't necessarily see your whole domain/subdomains hit.
With a manual penalty, whether or not the subdomain is hit depends on whether or not it shares the low quality signals that got the main domain hit. I certainly wouldn't recommend isolating black-hat practices on a subdomain, however; a penalty on a subdomain CAN affect other subdomains and the main domain, but it doesn't always do so. It's something to keep an eye on.
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Panda is often a sitewide penalty, Penguin is usually isolated e.g. specific keywords, pages etc.
Take a look at this article, should give you some better insight into the updates and how they can affect your site/in what capacity they affect sites.
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