I tried exact match sub-domains from 2002 until 2010. It was on a site that had local information about products. So most of our URLs were like:
but we tried a handful of cities that got sub-domains:
Those "exact match sub-domains" ran for years but never ranked better than similar cities, even for the exact terms.
It did cause a lot of development headaches:
- Much harder to set up test environments
- Since we had cites with both styles of URL we had to have special case code for generating the URLs in those cases. Sometimes developers bypassed it and ended up generating the wrong style, so we had to have tests in place for that and redirect rules to clean up mistakes.
- relative URLs in the site header don't work the same way on a sub-domain vs on the main domain. All the common files on the site had to be specially crafted to know which domain they were on if they wanted to use relative links.
Because of these issues, we ended up retiring the sub-domains and redirecting the URLs back to the normal format.
Recently Google has announced that they are trying to tone down any ranking boosts that exact match domains get. I've never seen a ranking boost for exact match sub-domains, and I wouldn't expect one any time soon given that Google is also cracking down on exact match domains.