1. Panning, in photography refers to the rotation of the video camera or still camera in a horizontal plane. Panning a camera results in a motion similar to that of someone shaking their head from side to side.
  2. Slow shutter speed combined with panning the camera can achieve a motion blur for moving objects
  3. Slow panning is also combined with zooming in or out on a single subject, leaving the subject in the same portion of the frame, to emphasize or de-emphasize the subject respectively.
  4. This is based on the theory of relativity, that is when two elements are moving in the same direction and with same speed they are considered to be stationery in relation to each other. As we pan the camera along the subject movement, the subject is recorded as stationery but the background which is actually stationery is recorded with blur lines in the direction of the camera movement. So this is a good technique to convey a feeling of movement by using slower shutter speeds instead of faster shutter speeds to freeze the subject. 
Factors involved
Shutter speed - Slower is better but how slow should you go ? This also depends on the speed with which the subject is moving and how far or close is it to the camera. Basically you are tracking the subject in your frame besides the fact that you are unable to see through the viewfinder while panning. One may start with 1/30 or 1/20 but if you have experience and a steady hand you may try out slower shutter speeds as well.
Sharpness - This is quite important as in any photograph. While panning the chances of your main subject or rather the only subject almost all the time, are much higher so be very careful while focusing and understanding the path of your subject. When nothing is sharp in a photograph it is often considered as a mistake and also it does not really look nice.
Adding Flash - Flash freezes the action as its very brief and this brief burst along with the longer panned exposure helps in freezing the subject at least at one point. Experiment with rear and front curtain synchronization. Rear curtain gives a more dramatic depiction of action due to trails behind the subject. 
Focusing - Proper understanding of the capability of your equipment, the combination of a good camera and lens, is very important. How fast is the lens? How capable is your camera in tracking the fast moving subject ? You may switch over to continuos servo autofocus but sometimes pre focusing may also work fine. 
Tripod or Handheld ? If you know the path of your subject and are using heavy equipment to begin with, a tripod is indispensable. The advantage of the tripod as it does not let the camera move in the vertical direction as in case of hand held shots. However steady you hand may be, there would always be some vertical movement as well, leading to a blur in the photograph.
Distance matters- Subjects closer to the camera appear to be moving faster compared to those away. If the subject is closer, it would be more difficult to pan as you would need to move the camera also faster keeping pace with the subjects movement.
Background - The background is going to be in motion or appear as streaks so it does not really matter what is background is. 
Practice and proper understanding of your equipment makes a difference - As with any other aspect of photography practice with simple and maybe even controlled situations first rather than trying it out on an actual assignment or an important occasion. Proper coordination between the subject and the camera movement, being handled by you plays an important role.
Shoot more - Shoot more but at times you may not really be able to do so from one particular point. lets say, you need to capture a particular athlete from your position on a race track. He may not pass through that point again. so you may get just about one chance to execute your skills.
IS /VR - This works well when you are shooting handheld. Out of the two modes, normal is recommended when only the subject is moving and that too in one direction and the active mode is suggested when the photographer is also moving or the subject movement is more erratic. However, also check the exact specifications of your camera / lens in the instruction manual
 
Applications
Although not restricted to, Panning is very often used in Sports, wild life and birds photography. 

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