The only thing smarter than the viral marketing campaign is the indictment of society at large...
1) People used to believe that other people were witches, and would kill them accordingly. This was called "The Burning Times."
2) We have seemingly evolved in the last few hundred years, and don't do that anymore, at least not in a "mass genocide" sort of way, and not because of witchcraft.
3) People are surprisingly ready to believe that a real witch, whose nickname is Blair Witch, but whose real name is Elly Kedward, killed three real college students, and possibly more victims. People believe that three college students went back in time about 50 years, were killed by a witch and / or her servants, and then the footage of their documentary was buried, and the footage was found about 51 years after it was buried. There's a documentary and a website as proof.
4) People invade the town that they see in the movie, called Burkittsville, and search for the witch, or any signs of the witch, or the missing students. The website crashes from so many visits.
5) The directors explain that the movie is fake and that the witch, and the lore surrounding the witch, was entirely made up by the directors. Society still thinks that the Blair Witch is real. Some keen eyes notice that certain items in Rustin Parr's house were made a good decade after it supposedly burned down. Other people notice that there aren't enough woodsy areas in Burkittsville for anyone to get lost in, and that some of the movie was probably filmed in nearby Seneca Creek State Park, a state park that looks drastically different than what the unkempt woods would have looked like 50 years ago. Society demands that the Blair Witch is real and that authorities do more to find the bodies of the poor missing students, and bring to justice the 200 year old Elly Kedward and her wicked satanic servants. Invaders of Burkittsville cause chaos and destroy personal property. Violence ensues. The actors have to actively come out and explain that they are still alive, simply actors, and how the film-making process worked (GPS, ad-libbing, method acting, letters written by directors for the actors to find, etcetera) before people believe that it's fake.
6) Audiences now view The Blair Witch Project as a standard horror mockumentary, with actors performing, essentially, a hoax... for money... and there is nothing supernatural about it, but audiences still believe, in A True Story In My Universe sort of way, that a fictional witch killed three fictional college students, always wondering why the witch is never seen (as seeing the witch would make it a better movie). Viewers believe that Elly Kedward was a child-murdering witch who got what she deserved, despite no evidence to her being a witch, and no evidence pointing to anything other than that she was falsely accused and unjustly murdered, like what happened in the Burning Times.
7) People barely remember The Blair Witch Project now, let alone apply their experience to other "photographic / video evidence" of the supernatural.
Reading the back story of the Blair witch legend and then rewatching the movie will give you many of those moments. Remember the students finding three odd, innocuous piles of stones around their tent? Those become as creepy as hell when you know what that means.
Who is that guy in the corner? What happened? If you recall to the beginning of the movie though, a man told the story of the child murderer who lived in the woods in the '40s, and how he would take children by pairs into his basement and make one face the corner while he tortured and murdered the other before killing them. Gives you the chills.
It gets even worse when you read the book covering the 'investigation' of Heather's disappearance. Remember that wall covered with weird writing inside the old house that she runs past close to the end of the film. That was the wall of child killer Rustin Parr's house, as photographed in crime scene photos taken after his arrest. As the investigator is told:
"It's the same writing."
"It's the same wall."
"It's the same house. And that is completely impossible, because that house burned to the ground in 1947."
"Just what is going on up there?"
And then there's the account of the search party sent out to look for the missing kids. Based on the footage, they were in the same place at the same time as Heather and Mike, but never saw them.
Also, the three students used two cameras, but their film material is apparently cut together in one piece. If they vanished and just their film material is found, who did this? (Might only be a case of Fridge Logic though, YMMV.)
Perhaps the people who found the footage put the two reels together for the convenience of the viewer?
In the "universe" of the film, the viewer is led to conclude that's exactly what happened.
Canon says all the footage was put together after it was found to create a narrative of what happened by the police or whoever found the footage.
During the last 20 minutes of the film, there are a few instances where Heather and Mike are talking to each other, and they have the color camera or none at all, yet we still get a few gray shots of the scenery picking up on the conversation. This is either the editor of the "found film's" doing, or a scarier idea would be that the Witch was within earshot and was borrowing the 16'' lens for a few nature shots.
OR — members of the Blair Witch Cult was filming them while they were in the woods.
So Rustin Parr kidnapped children two at a time, and had one stand facing the corner while he butchered the other one. Imagine being the kid in the corner, able to hear everything going on behind you, knowing that you're next...