For those of you not yet aware, Google is currently updating the PageRank they are displaying in their toolbar. Each update causes a stir among the SEO community and webmasters trying to get their websites to the top of the Google Rankings.

What Is PageRank?
Without getting into too much detail, PageRank is essentially a score out of ten as to the "value" of your site in comparison to other websites on the Internet. It is based on two primary factors; the number of links you have pointing to your website and the value of the links pointing to your website. The value is calculated based on the PageRank of the page linking to you and debatably the relevancy of the page linking to you (there is no hard evidence to back up the relevancy factor in regards to PageRank that I have seen however it definitely is a factor in your overall ranking).

If you are interested in more information on PageRank you would do well to visit the many forums and articles on the topic and also visit Google's own description on their website at http://www.google.com/technology/ where theygive a brief description of the technology.

What's New?
The most current PageRank update will undoubtedly cause a larger stir than usual in that many sites have shown drops in their visible PageRank while at the same time showing significant increases in their backlinks. This fact reveals that one of three things has occurred in this latest update:

Google has raised the bar on PageRank, making it more difficult to attain a high level, or The way they are displaying their backlinks has changed, or The way they calculate the value of an incoming link has changed.

Any of these are possible and has been noted in the past as something they are willing to do. Additionally, it is possible for all to occur at the same time.

As we don't like to use client's as examples I will use the Beanstalk site, backlink counts, and PageRank changes as the meter by which the following conclusions are drawn, however this information was attained through looking at a number of client website, and their competitors.

Google Raising The Bar To Lower Yours
In the past few PageRank updates it has become quite apparent that Google is continuously raising the bar on PageRank. In their defense, with all of the reciprocal link building, link renting, etc. going on this was a natural reaction to the growing number high PageRank sites that attained those ranks simply by building or buying hundreds and thousands of links.

There is no doubt that this is a factor in the changes in this current update. If your site has maintained it's PageRank, and the PageRanks of your second-level pages then you have done well in holding steady and if your competitors have not been as diligent their positions will slip.

New Backlink Calculations
I mention this one only to bring to light that it is a possibility for your future consideration during other updates. The Beanstalk website went from 750 shown backlinks on Google to 864. it should be noted that Google does not show all backlinks (if you want a more accurate backlink count go to Yahoo! and enter "link:http://www.yourdomain.com" (don't forget the http://)).

When the Beanstalk site showed 750 backlinks on Google we were showing around 12,000 on Yahoo! (about 6.5% showing on Google). The Beanstalk site is now showing 864 on Google and 15,500 on Yahoo! (about 5.6%). If anything then, Google is showing less links than before which negates the possibility that a website's PageRank is dropping due to a decrease in links but being hidden by an increased number being displayed.

In short, while which backlinks Google chooses to display has certainly changed over time it does not appear to be a major factor in this update. If you see an increase in your sites backlink counts during this update you undoubtedly have an increased number of links.

The Value Of Links
Separate from the number of links you have is their value. This appears to be an area of significant change in this update. Areas that appear to have reduced value in regards to affecting PageRank are:

Multiple links from the same site or run-of-site links
Intelligent and relevant reciprocal links do not seem to have been penalized, probably due to the increased relevancy factor. If you reduce the value of irrelevant links and raise the value of relevant ones then there is no need to penalize reciprocal links as, done incorrectly, they will penalize themselves. Links with text around them that indicate they are purchased such as "Partners", "Advertising", etc.
Google has and is actively trying to reduce the value of paid links. This appears to have been moderately successful where there is clear indication that the link is paid for. Links from sites that hold little relevancy (this factor is based on educated speculation)
The relevancy factor appears to have become more important. Links from sites with content related to yours is showing positive results while sites with larger numbers of less relevant links are showing drops in PageRank.

What Does This Mean?
For those of you who have been proactive in your link building, and focused on relevant sites using the Google Directory, searches or a tool like PR Prowler it means, "stay the course". Those of you who have been building or buying links based only on PageRank with little concern for it's location, or how it is presented - you will need to adjust your link building efforts accordingly.

What Do I Do - My PageRank Dropped ?!!?
The first thing not to do is panic. Take a deep breath, PageRank is one factor of dozens that Google uses to determine the ranking of your page, it is not the only thing. Now, visit your main competitors sites - there's a good chance you'll see that they too dropped in PageRank. The plus side to these kinds of updates is that they're universal. It's not as if Google has it in for you specifically and so when they do an update, the positive and negative impact is felt by all.

Now, if you've noticed that everyone around you has stayed the same or increased in PageRank try to remember this, there's nothing you can do about where you're currently positioned in regards to PageRank and it will probably be another 3 months before Google updates the public PageRank again so ... start building some good quality (high relevancy, solid PageRank) links, work towards and increase in the next update.

Panicking now won't help, intelligent reaction will.

What Happens Now?
Traditionally the search engine results will begin to fluctuate based on the new visible PageRank 3 to 7 days after they are visible. This does not have to be the case as Google's had these numbers all along but it's worked this way in the majority of cases in recent history. So monitor your search engine positions over the next week or two and watch for changes. Try to hold back on making major changes to your site during this time as often the final positions will differ from those that can be viewed during the shuffling. In a couple weeks time evaluate where you stand and tweak your site as necessary but don't spend too much time on that ... you have a solid link building effort to undertake.