For the residents of the Hebrides (a chain of islands north of Scotland), if you had head lice you were healthy. There was ample proof: if the lice left their host, fever would follow. So, to get rid of the fever, all they did was put lice back in their hair. 
Don’t knock it till you’ve tried it – it worked. However this is a wonderful example of false causality – simply the muddling of cause and effect. 
When the lice left the patient, it was because of the fever – lice don’t like their feet to get hot, so they leave, and when the fever breaks, they move back in. However, I wouldn’t tell the islands’ residents – people feel more positive when they feel they have some control over what happens in their life. 
Shame on Alan Greenspan
In the ’90s the entire financial community in the USA (or the honest ones left) revered the head of the Federal Reserve, Alan Greenspan. He had a magical aura about him – everyone believed that their monetary policy, under his guidance, was keeping the country on the road to prosperity. He wasn’t – it was China’s eagerness to buy US debt that played the major role. He was just lucky. False causality at work. 
Another bias we fall prey to is the action bias – to do something even if it achieves nothing. For example, soccer penalties are relatively evenly distributed to the left, the middle, and the right of goal. However, although the odds are somewhat equal for all three, goalies dive to the left or right over 90% of the time. They do this because of the action bias: the feeling (or appearance) that at least doing something has some influence over the outcome. 
The power of propaganda
Although not really a bias in our thinking, the sleeper effect explains why ridiculous you’re-so-obviously-trying-to-sell-me-something advertising works. During World War 2, the war department in the US spent so much money on propaganda films that they decided it was probably a good idea to see if it worked. The initial findings suggested that would have been better off investing in real stuff like tanks or Playboy magazines for the men at the front. Even if the content was substantiated (or reasonable), it was immediately dismissed, because it was seen for what it was – propaganda.
However, nine weeks later the whole story changed. They measured the soldier’s attitude a second time and found that those who had seen the movies were much more gung-ho than those who had not. The movies worked after all. 
We get bad ads, because they have value
So, here’s the bottom line of why bad ads work (or the best explanation so far): The source of the argument fades faster than the argument itself. In other words, we forget that the message entered our brain from a clumsy TV ad that we knew was trying to persuade us to do something in the interest of the advertiser – not necessarily in our best interests. However, the message itself sticks long after the source fades. So when we walk down the aisle we truly do choose the washing powder that we were told is better than ‘the standard’ one.
I’m not advocating bad ‘product, feature & price’ advertising; what I am saying is don’t get so upset when you see it, it actually does work.
1. R Dobelli. The art of thinking clearly. (Publisher: Sceptre, Hodder & Stoughton Ltd, London, 2013).
2. Hans-Hermann Dubben, Hans-Peter Beck-Bornholdt, Der Hund, der Eier legt: Erkennen von Fehlinformation durch Querdenken. (Publisher: Reinbek: Rororo, 2006). Sorry, only in German. Thank heavens for Google Translate.
3: I forgot, but it is referenced in plenty places. Incidentally it has also been shown that having no control of your work environment is one of the principle causes of work stress. An ****hole boss can kill you faster than smoking. Leave now.
4. Bar-Eli M, Azar OH (2009) Penalty kicks in soccer: an empirical analysis of shooting strategies and goalkeepers preferences. Soccer & Society, 10:183-191.