This is an ongoing topic in the SEO business, but I believe we have a proven record where a blogging subdomain approach is more effective than a blog subfolder.
  1. Your domain has already established authority and pagerank, so adding a subdomain and content will 'latch' onto that authority and you'll see some good results quicker.  This is advantageous to both, but a blog subdomain has other advantages...
  2. Since Google treats a subdomain as a (somewhat) separate domain, your site or blog can take advantage of backlinks between the two.  Backlinks are a gold standard of relevance in the SEO industry.  The more backlinks your site or blog has, the more search engines believe the site to be relevant.
  3. Consumers are tuning into blogs to make purchasing decisions, so we love the fact that our clients prominently put blog, blogs or blogging in the subdomain.  Blogging denotes honesty and trust and that's what we want search engine users to see.
  4. Real estate matters and by having both a domain and subdomain showing up on search engines, you're literally covering a bit more of the Search Engine Results Page (SERP).  If your blog is in a subdirectory, you'll get a single entry, a subdomain will add an additional entry.
  5. Providing a distinctive difference can be advantageous to differentiate your 'polished marketing' from the 'voice' of your company.
Some SEO experts might disagree with me on this, but I believe there is a distinct advantage to a blogging subdomain.  Much of what you read out on the web is simply comparing a subdomain to a subfolder, but not targeting the advantages and disadvantages when you're singling out a blog.