Listening is the first step towards social media engagement - and thankfully it's generally free. If you haven't already, you should set up Google Alerts for not just your company, but your products, your key spokespeople, your competitors and the main trends you want to be associated with. By adjusting the frequency of these Alerts you won't get deluged, and can save them for analysis later.
You should also create an RSS feed for your favorite searches in Google BlogSearch. IceRocket is another good source for blog monitoring.
You can monitor Twitter for the same keywords (company, product, competitor, spokespeople, trends) either by saving a search term on the Web version, or by creating an RSS feed of the results at Search Twitter (formerly Summize) and putting it into your reader. Personally, for my main persistent searches, I create columns for them in Tweetdeck so I can review them at a glance. This doesn't scale if you have multiple terms, but it's great for a rapid scan.
You can also monitor what is being said about your company in blog comments using BackType.
So now you've covered the Web, blogs, Twitter and blog comments. You could add tag searches to that in Delicious if you wanted, and a search on YouTube to cover the descriptions/titles of videos. With the exception of forums or subscription sites, you're in pretty good shape at this point in terms of knowing what's being said.
The next challenge is getting some context to this wealth of information, and then turning it into something actionable. For many companies, if the volume of alerts is low enough, you can do that manually. For larger brands, there are several services which can help here - but context costs. Take a look at Radian 6 or ScoutLabs (or Biz360, BuzzLogic, MeltWater Buzz, Factiva, Lexis-Nexis, Vocus even). They all operate on a monthly subscription basis. Have in mind about $500 per month for an entry level service.
If you sign up for a paid service, you'll start to get some historic trend analysis, competitive benchmarks, drill down info about the source of comments, rate of proliferation, associated trends, tag clouds and various other graphing tools. Most will also pull all that alerting information into a central flightdeck for ease of use. If you are serious about monitoring and response, you'll probably find one of these services saves you time and gives insight which you couldn't otherwise get.
The social media monitoring space is rapidly evolving, and no service covers all the channels for all geographies. The good news is that costs are falling and the free services are becoming increasingly rich. Regardless of the tools you use, the most important thing is to set up your system, refine it and then determine your engagement plan.
