Facebook has started rolling out a new location-based advertising tool that allows local businesses to reach customers based on their geographic location.

Facebook, the world's largest social networking service, makes tons of cash from advertising and it is evident that the social giant takes extreme steps to make its source of revenue appealing for businesses. The social networking giant announced Tuesday that a new advertising feature for local businesses will target users based on their physical location. In an official blog post, Facebook explained that an ad could pop up in the News Feeds section around the same time a user walks by a physical store that is being advertised or appear some time later.

The new advertising scheme will help Facebook generate a new revenue stream with exposure to a large audience for local businesses. With the local awareness ads, Facebook is looking to remedy the loss attained by small business over the past year due to massive changes in algorithms for promoting Pages. The new advertisement feature builds on the existing "Nearby Friends", which allows users to continually share their location with their friends.

"With local awareness ads, businesses can quickly and easily find new customers by showing ads to groups of people who are near that business's neighborhood," Facebook said in an official post. "Local awareness ads are built to be more cost-effective than traditional advertising channels like newspaper while offering more precise targeting and greater reach. We think they're the best way for local businesses to reach people near them, and the best way for people who use Facebook to discover more useful things in their area."

In order to post local awareness ads, businesses need to update their business address and the radius around which the users will receive notifications. For further simplification, businesses can also target a particular group of people, based on their age and gender. Facebook will show the number of people who will potentially receive ads on their feeds.

Within the local awareness ads, business can also add a call-to-action button and "Get Directions" feature to help users locate the store.

Facebook's new ads will be rolled out in the United States over the coming weeks before a global roll-out in the coming months.