It was 1938, and it was on the radio...
I don't think the number who thought an actual invasion was as high as some think.
You had to have a radio, and electricity, too, to run it. In 1938, a lot of places didn't.
You're right. I've read up on this, and there were a lot of factors in that:
1, of the people with radios, very few people were likely tuned into the program. It was an unsponsored program that was third place in its time slot.
2, newspapers were still bitter at radio for being free and competing with their paid product for news scoops. Unscrupulous publishers, like many of the tabloids of today, deliberately ginned up the handful of reports (mostly people listening to other shows who tuned in during those shows' commercial breaks) to humiliate radio as a medium.
3, Orson Welles ended up becoming a huge star not long after thanks to Citizen Kane and The Magnificent Ambersons. He likely used the broadcast (which he repeatedly advertised as fiction in line with then-FRC regulations) and the alleged reaction for publicity to get those films made.