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Matt Cutts: If you were falling asleep during that question I’ll try to make it a little more concrete. Would you rather have stuff in the path name or would you rather have stuff all together at once in the filename? To me the answer is that it doesn’t really make that much difference.

This is a perfect example where you can do some questions; you can do some experimenting and see what works for you. Think about it like a user though. A user would probably prefer something like tools, category is hammers, and type of hammers is acme metal pound hammer. Whereas a lot of users, especially savvy users, if every single thing is in the filename; if the filename is tools-hammers-acme—metal-pounder it can start to look a little spammy.

It’s not that we have some factor that says the more hyphens you have the worse you are automatically. It’s just that users might not click on it because they might not think of it as quite a good search result. So if there is a clear sort of delineation or categories where you can have stuff in the path I would probably, just for user experience, go with the path.

As far as search engine rankings I’m not sure that there’s really that much difference between the two. But you might want to be a little careful because of the user experience of having a really long filename that’s just stuffed with hyphens. People might not like it if they see dash, dash, dash, dash, dash, dash and so they might not click on it.