I have been working in SEO for over 10 years and have built search agencies from the ground up. I've also worked with some big brands on International SEO like Active.com, as well as many US based chains like Extended Stay Hotels.

I suggest sub-directories as they are MUCH easier to manage and promote via SEO.

You can't have specific local IPs with sub-directories, but you can with sub-domains. But that's not hyper critical, there are WAY more important factors. Plus, you can geo-target in Google Webmaster Tools. Your current structure for sub-directories is perfect: http://drivingtests101.com/Canada/Ontario

With subdomains, each will be treated like a brand new site. So you would have to work very hard to get each to gain good authority SEO-wise. Plus managing and hosting lots of subdomains is a ton of work!

In order to not get penalized you need to:
Implement the the "lang" and "hreflang" tags in the HTML of each country directory and all pages within.

Have unique Title tags and descriptions written in each language.

Have unique content for each country and state page. Written in each respective language.

Yes, its a TON of work but hey, you are trying to take over the world! If you are serious about international search traffic then you will do these things and the costs should be balanced out with the extra traffic you'll get. If you can make the root domain super authoritative then it will boost ALL of the internal pages. This is also key to ranking well for international search.

I'm open to a follow up call to elaborate on any of my responses or to answer other questions.

There's no way to answer this effectively via a message. If you want to talk about this and get solid info, let me know. As you already know, we are ranked for some of the most competitive terms in the world... So we know our stuff.

SEO is a VERY dangerous field to "get it wrong" in... Because a Google slap is not something you ever fully recover from... Don't risk that.

The new hummingbird update is currently rolling out too... That makes it that much more important to get it right.

Why use either? Set the site up correctly off the bat with WP and use pages and sub pages. Build an authority site, silo correctly and use a good SEO service.

Let me know if you need further advice as I am an SEO specialist.

Lee

I would go with subdomains unless you are using the same content across the various countries as it applies - don't want duplicate content issues.
Also use hreflang for languages and regions https://support.google.com/webmasters/answer/189077?hl=en

The Geo-Targeting feature allows you to provide Bing with hints about the intended audience for your website (or a section of your site) by connecting it to a country. Whereas other Webmaster Tools let you do this only at the site level, the Bing Geo-Targeting feature provides you with additional flexibility: multinational sites do not need to verify each section they want to geo-target separately . Instead, Bing Webmaster Tools Geo-Targeting allows you to define a country audience for your entire website or for sections of your website from within a single view. On top of that, you can do this on multiple levels:
1. At the domain level: this option allows you to geo-target an entire domain to a specific country. This option will only be available for sites that are on so called “geo-targetable top-level domains”, such as .com, .org, .net. With a few exceptions, country-code TLDs (ccTLD) will not be able to set a country-affinity at the domain level, as the ccTLD continues to provide the stronger hint. However, they will be able to use all the following options as well.
2. At the subdomain level: this option allows you to set a country affinity for an entire subdomain on your site. This is great option if you are using sub-domains on your site to segment your content by country, say http://nl.example.com for the Netherlands.
3. At the directory level: this option allows you to set a country affinity for a specific folder on your site. A great option if you are using country-specific directories or folders on your site, say http://www.example.com/italy/ for Italy. All pages within the folder will be considered to be for your Italian audience.
4. At the page level: for even more flexibility, you can set a country at the page level. This is a great option if you have a single landing page for visitors from a specific country. For example, a site in the Netherlands — hosted on the a .nl ccTLD — can designate a single page to be targeted to a German audience, say http://www.example.nl/willkommen-deutsche-gaeste.html.
You should use the Geo-Targeting feature for sites or sections of a site that are dedicated to a specific country and you are not hosting them on a local country-code TLD that matches the country. If you are targeting a specific country and your domain already uses a local TLD you also do not need to geo-target the pages on your site. Also, there is generally no need to geo-target sites or site sections that are of aimed at a global audience or that apply to multiple countries at once. If, for example, you have a multilingual site that has a German section, you should not target it to Germany if you also are targeting other German-speaking audiences, such as those in Switzerland and Austria with the same content.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath