Abstract: A profit function of different ad intensity was derived within the framework of vertical product differentiation in accordance to the assumption of consumer's characteristic to reveal the ad models of firms with different goodwill. The ad models with different quality expectation coefficient were analyzed by the method of backward induction. The results showed that if the quality expectation coefficient is too small, the firms will choose not to pay the advertising, and if the coefficient is large enough, the high ad intensity will be the firms' choice, and if the coefficient is in the middle position, it's no difference for the firm to invest in high ad intensity and low ad intensity. The quality expectation coefficient relates so closely to the goodwill of firm that it can be regarded as the goodwill itself to a certain extent. A monopoly firm with better goodwill will provide high quality product to maintain its existing goodwill, which confirms further the conclusion that high-intensity ad signal high-quality.