Best way to name a subdomain

[jimisan]

Hello,

I need some expert advice here. I'm very confused at the moment. Which is a better method of naming my subdomain?

www.sitename.com/directory
or
www.subdomain.sitename.com

May I know what's the advantages and disadvantages of both methods?

I've other niches to start but am stuck with which is a better way. All help are utmostly appreciated.