SAN FRANCISCO (AP) -- Online search engine leader Google Inc. is introducing a new system designed to make it easier for people to find things closer to their homes, paving the way for the company to make more money selling ads to small businesses.

The new algorithmic formulas, scheduled to begin working Wednesday, will allow Google to display more local information in response to search requests that include a ZIP code or a city's name.

Google says these geographic queries will now be more likely to generate phone numbers and specific addresses on its main results page. In many cases, Google also will display an icon of a compass that can be clicked upon to open another page containing a detailed map and directions to the location.

Web surfers who want a broader selection of parochial information will be encouraged to visit a new gateway, http://local.google.com.

"Google's goal is to connect searchers with the information they need whether it's halfway around the world or in their neighborhood," said company co-founder Sergey Brin.

With the new features, Google is joining an accelerating push to become more local. Last week, Yahoo! Inc. introduced a similar provincial tool, called SmartView, and Verizon Communications recently overhauled its SuperPages.com site to deliver more useful local results.

Mountain View-based Google believes it will have a major advantage over its other rivals--the Internet's biggest index, consisting of 4.3 billion Web pages.

The emphasis on more local search results reflects an emerging change in how people are looking things up.

As more homes sign up for high-speed Internet connections that make it easier to call up Web pages, people increasingly are turning to the Internet before the Yellow Pages for business referrals, said Greg Sterling, who studies local search for the Kelsey Group.

Despite their rising popularity, Google and the other search engines still haven't found a way to siphon much of the estimated $22 billion that small businesses spend annually on local ads in the Yellow Pages, newspapers and direct mail, Sterling said.

By making it easier to find local information, Google hopes to eventually entice more small businesses to buy text-based ads that eventually will be displayed next to its search results, Mayer said.

Text-based ads tied to search results, often called "pay-for-performance," have become a lucrative business for Google, Yahoo, and a wide range of other Web sites. Merchants spent an estimated $2 billion on the ads last year and most industry observers believe the market has barely been tapped.