If I had my way for serving up localized and geographic specific international content, I’d go with a gTLD (country specific top level domain). But it isn’t always possible or practical.

When you can’t, you should probably go the subdirectory or subdomain approach. For example, if you have Hebrew content and can’t host it on domain.co.il, then maybe try hebrew.domain.com or domain.com/hebrew (or country name).

In a Google Webmaster Help thread, John Mueller from Google responded to a question about this saying either subdirectories or subdomains work the same in this case. He wrote:

Forum discussion at Google Webmaster Help.