TL;DR

🔥 The Problem: Gmail, Yahoo, and Microsoft Outlook now penalize entire domains when one email stream goes bad — your marketing newsletter gets flagged, your password resets stop working

⚡ The Solution: Split traffic across sub-domains like notify.example.com for transactional and newsletter.example.com for marketing — each builds independent reputation

📈 The Results: Teams using sub-domains see 24% fewer emails in spam folders and can experiment with marketing without breaking critical user flows like signups and logins

Your Email Sending Reputation Is at Risk. Use Sub-Domains to Fix It.

If your product sends both transactional and marketing emails, and you're still using the same domain for everything, it's time for a rethink.

Mailbox providers like Gmail and Yahoo — along with Outlook.com, iCloud.com, and others — have gotten much smarter about how they evaluate sender reputation. These days, they look at each sub-domain separately. That means a high complaint rate on a newsletter can drag down your password resets, even if those messages are clean and expected.

The solution is straightforward: split your traffic across dedicated sub-domains. For example, send transactional messages from notify.example.com and promotional messages from newsletter.example.com or updates.example.com.

Here's why it works:

• It protects critical flows like account creation and password resets from issues on the marketing side
• It makes it easier to set up and enforce SPF, DKIM, DMARC, and other authentication tools
• It helps you meet Gmail and Yahoo's bulk-sender requirements that went into effect in 2024

This approach is no longer just a best practice. It's a basic step that every team should take if they want to avoid last-minute firefighting when something goes wrong.

Gmail and Yahoo in 2024. Outlook in 2025. Sub-Domain Segmentation Is Now Table Stakes.

In February 2024, Gmail and Yahoo rolled out stricter rules for anyone sending more than about 5,000 messages per day to their users. Microsoft Outlook quickly followed suite in early 2025. These requirements aren't optional — if you don't meet them, your messages will get rate-limited, filtered to spam, or blocked entirely.

Here's what these providers now expect from high-volume senders:

SPF and DKIM must align with the visible From address This means your domain (or sub-domain) has to match the one used in your authentication records.

You must have a valid DMARC policy in place At minimum, p=none, but most teams should aim for quarantine or reject on marketing domains.

Your spam complaint rate needs to stay under 0.30% Gmail recommends staying below 0.10% to maintain solid inbox placement over time.

Marketing messages must include one-click unsubscribe And the unsubscribe must work within two days.

Trying to meet all of these requirements on a single domain that handles both transactional and promotional email is possible, but it adds risk and complexity. If a marketing campaign causes your spam rate to spike, there's a real chance your critical messages — like password resets or account alerts — will get swept up in the fallout.

Splitting your email streams across sub-domains like notify.example.com and newsletter.example.com makes it easier to stay compliant and contain any issues that come up.

It also gives your team the flexibility to test changes, update templates, or try a new email provider on the promotional side without affecting the reliability of your product notifications.

Real-World Scenarios Where Sub-Domains Save You

Even if your current email setup "works fine," it only takes one bad send or technical hiccup to create real problems. Using separate sub-domains for different types of email gives you a buffer. It isolates issues, contains damage, and keeps critical messages flowing when things go sideways.

Here are a few common scenarios where sub-domains make the difference:

The takeaway is simple: without sub-domains, every change or mistake has the potential to turn into a production incident. With sub-domains, you gain separation of concerns. Each stream can be tested, tuned, and protected independently.

More Teams Are Making the Switch — And Seeing Results

This isn't just theory or niche advice. More and more teams are adopting sub-domain segmentation as a core part of their email infrastructure.

A 2025 study by Mailgun looked at senders pushing over 50,000 messages per month. Nearly half of them — 49% — had already split their marketing and transactional traffic across different sub-domains.

What happened next? On average, those teams saw a 24% lower spam folder rate over the next six months compared to senders who continued using a single domain for everything.

That means fewer support tickets, better engagement, and more predictable delivery for both promotional and product-critical messages.

It also means these teams could respond faster to changes. They were able to tighten DMARC policies, experiment with new ESPs, and clean up lists without worrying about breaking transactional email or customer logins.

For product managers and engineers, it's helpful to think of sub-domain separation like circuit breakers. It's a simple bit of architectural planning that can prevent a bad send or config error from taking down the whole system.

Sub-Domains Make Security and Brand Trust Easier

Today's email ecosystem expects senders to prove they are who they say they are. Security protocols like SPF, DKIM, and DMARC are table stakes. More advanced features like BIMI and MTA-STS are becoming common too.

The problem is that trying to manage all of this on a single domain gets messy fast. Different streams have different risk profiles, and not every email needs the same level of branding or enforcement.

Sub-domains give you the flexibility to configure each stream appropriately without stepping on each other.

Here's how it helps:

DMARC You can set a general policy like p=none at the root level to monitor everything, but apply stricter policies on individual sub-domains. For example, newsletter.example.com might use p=quarantine while notify.example.com stays in monitoring mode until you're ready to enforce.

BIMI BIMI shows your logo next to emails in inboxes like Gmail and Yahoo. It requires strong authentication and DMARC enforcement. You can set this up on your promotional sub-domain without exposing internal tools or system alerts.

MTA-STS and TLS Reporting These tools let you enforce encrypted delivery and detect downgrade attacks. Sub-domains let you publish different policies depending on who is sending mail and what infrastructure is involved.

Separating streams doesn't just reduce risk — it also unlocks new capabilities. You can confidently invest in sender branding and email security without worrying about one misstep affecting your entire domain.

How to Set It Up: A Simple Blueprint

You don't need to overhaul your entire system to get started with sub-domain separation. Most teams can make the shift in a few short steps — and it's often easier than you think.

Here's a straightforward setup plan:

1. Choose Clear, Future-Proof Names

Pick sub-domain names that make it obvious what type of email they're responsible for. Avoid overly generic names like mail. and instead aim for clarity.

Examples:

• notify.example.com — for transactional messages like receipts, password resets, and system alerts
• newsletter.example.com or updates.example.com — for promotional campaigns, product announcements, or lifecycle flows
• auth.example.com — for time-sensitive security messages like OTPs or MFA codes

2. Configure DNS and Authentication Per Sub-Domain

Each sub-domain needs its own set of records. Most ESPs provide copy-paste instructions. A typical setup includes:

; SPF
newsletter.example.com. TXT "v=spf1 include:sendgrid.net -all"

; DKIM
s1._domainkey.newsletter.example.com. CNAME s1.domainkey.u12345.wl.sendgrid.net.

; DMARC
_dmarc.newsletter.example.com. TXT "v=DMARC1; p=quarantine; rua=mailto:dmarc-reports@example.com"

; Optional MTA-STS TXT (for TLS enforcement)
_mta-sts.newsletter.example.com. TXT "v=STSv1; id=20250801T000000Z"

3. Warm Up the New Sub-Domain Gradually

Mailbox providers watch new sending domains closely. Warming up means slowly ramping volume over a couple of weeks while keeping spam complaints low.

If Gmail Postmaster Tools shows a drop in reputation or complaints start to rise, pause and reassess. Better to move slowly than to get flagged early.

4. Set Up Monitoring and Feedback Loops

Once your records are live and you're sending, make sure you can track performance by stream.

• Add each sub-domain to Google Postmaster Tools to get its own dashboards
• Configure DMARC aggregate reports (RUA) to go to separate inboxes so you can review trends clearly
• Use ESP webhooks or bounce logs to monitor for early warning signs like high bounce rates or spam traps

This blueprint works whether you're sending via one ESP or many. Once your sub-domains are live and warmed up, you'll have the freedom to test changes, experiment with new tools, and protect your critical flows — all without stepping on your own infrastructure.

Going Beyond Just Transactional and Marketing

Most teams start with two sub-domains — one for transactional messages and one for promotional — but that's just the beginning. As your product and email program grow, there are real benefits to adding a few more sub-domains with specific roles.

Here are some common examples:

Why it helps:

• You can test different ESPs or infrastructure setups without putting production traffic at risk
• You get more targeted analytics and monitoring per stream
• You can apply stricter or looser policies depending on the sensitivity of the message
• You isolate list quality issues and engagement drops, making it easier to troubleshoot

Each sub-domain acts like a lane on a highway. Some need to be fast, secure, and uninterrupted. Others can afford to stop and experiment. Segmenting them gives your team the flexibility to do both — without collisions.

Common Pitfalls and How to Avoid Them

Sub-domains are powerful, but like any infrastructure decision, they can backfire if used the wrong way. These are the mistakes we see most often — and how to steer clear of them.

Using Too Many Sub-Domains

Some teams try to spread out risk by creating a bunch of throwaway sub-domains and rotating through them to avoid blocklists. This approach might have worked a decade ago, but today, it's a red flag.

What happens: Mailbox providers detect the pattern and may penalize your root domain or your IP range.

What to do instead: Stick to a small number of well-named, long-lived sub-domains. Use them consistently and build reputation over time.

Missing Basic DNS Records

Even if you don't plan to receive email on a sub-domain like noreply.example.com, you still need to publish minimal DNS records.

Why it matters: Some spam filters downgrade or reject mail from domains that don't resolve properly.

What to do: Add A and MX records (or use dummy entries) for all sending sub-domains, even if you're not expecting replies.

Misaligned Return-Paths or Bounce Domains

You've set up SPF and DKIM for your sub-domain, but your ESP is still using the root domain for bounce handling.

What happens: Your SPF alignment breaks, which can hurt DMARC compliance and reputation.

What to do: Either use the same sub-domain for your return-path (bounce address) or set up a bounce-specific sub-domain like bounces.newsletter.example.com.

Reusing Tracking Domains Across Streams

Using a single open/click tracking CNAME across all your email can leak reputation between streams.

What happens: If your marketing messages get flagged or clicked by bots, it can affect delivery of your transactional mail.

What to do: Dedicate a separate tracking domain per stream or at least per major channel (like transactional vs. marketing).

Treat sub-domains like small, independent systems. They need their own monitoring, records, and care. That's what gives them their protective power — and avoids messy, hard-to-debug deliverability issues down the line.

Subdomain Migration Checklist

Moving to a sub-domain-based setup doesn't have to be complicated. Here's a practical checklist to guide your team through the process. Whether you're migrating a single stream or planning to split everything out, this list will help you do it cleanly and safely.

Step 1: Audit Your Current Setup

• Review where and how you're currently sending email
• Check existing SPF, DKIM, and DMARC records
• Look at historical deliverability and complaint rates
• Set up Google Postmaster Tools if you haven't already

Step 2: Choose Your Sub-Domain Names

• Keep names short, specific, and easy to understand
• Avoid generic names like mail. or email. unless they serve a specific legacy need
• Examples:
  • notify.example.com for transactional
  • newsletter.example.com for promotional
  • auth.example.com for MFA and OTPs

Step 3: Provision DNS Records

• Add SPF, DKIM, and DMARC records per sub-domain
• Optional but recommended: add MTA-STS and TLS-RPT if your infrastructure supports it
• Make sure A and MX records are present for all sub-domains

Step 4: Verify Sub-Domains with Your ESP(s)

• Most providers let you authenticate each sub-domain separately
• Double-check that bounce handling aligns with the correct sub-domain

Step 5: Warm Up Gradually

• Start with your most engaged recipients
• Slowly ramp volume over 7 to 10 days
• Monitor Postmaster Tools and complaint rates closely

Step 6: Monitor and Optimize

• Keep DMARC reports flowing to separate inboxes
• Track bounce rates and spam complaints by stream
• Set up alerts for sudden changes in reputation or engagement

Step 7: Migrate Remaining Templates

• Once your new sub-domain reputation is stable, move over the rest of your templates
• If needed, use 301/302 redirects for old tracking links

Step 8: Review Quarterly

• Revisit DNS settings, DMARC policies, and engagement metrics every few months
• Adjust thresholds, experiment with BIMI or MTA-STS, and keep improving

Closing Thoughts

Splitting your email traffic across dedicated sub-domains isn't just a deliverability trick — it's foundational infrastructure hygiene. It helps you reduce risk, respond to issues faster, and build a system that scales cleanly as your product and audience grow.

With providers like Gmail and Yahoo tightening the rules, and others like Outlook.com and iCloud.com applying similar filters, doing nothing is no longer safe. A single bad campaign or misconfigured DNS record on a shared domain can take down password resets, signups, and core user flows. That's not just a marketing problem. It's a product reliability problem.

The good news is that the fix is simple, cheap, and totally within your team's control. Start with two sub-domains — one for transactional, one for promotional — and build from there. Use the blueprint in this guide to avoid the common mistakes, and set your streams up with proper monitoring and authentication.

You don't need to do everything at once. But you do need to start. Your future self (and your users) will thank you.