Signaling occurs when an informed person of a firm takes some sort of action to send out a message to those who are less informed.
A firm that sells a consistently high quality product can run a costly campaign to advertise their product because it is likely that the consumers will continue to purchase that product since it is of high quality.
In contrast, it does not make sense for a firm that sells a low quality product to run a costly campaign to attempt to advertise their product because the amount of money spent by that company to advertise their product will exceed the revenue that is brought in by selling that product because it likely that most consumers will attempt to try that product once, and will not purchase it again if it is low quality.
It is more likely that consumers will believe an advertisement that is much more expensive and flashy looking because they feel that a firm will not go through all the trouble spending a great amount of money if their product is not good. The expensive flashy advertisement for the high quality product will send out a signal to the audience and consumers that the particular product is very good without having to say much about the product itself.
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I guess we as consumers don't really care what the advertisement particularly says about the product. In our minds, we automatically make that connection that the product must be good, since producers have enough money and faith and in their product to create an ad in the first place.
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