It’s the question that is keeping the management of all companies awake at night: is there a single, cost-effective investment that can help grow a business even as the whole global economy is contracting?

The answer? By tapping into social media. If this sounds like the feel-good mantra of social media pundits, think again. It’s the advice of the Institute of Practitioners in Advertising who earlier this year said they believe that those companies who harness social media will be best placed to adapt to the volatile decade to come. Smart advertisers are wasting no time. Brands like T-Mobile, Sony, Heineken, Levi’s and Burger King are investing in YouTube viral videos, Facebook loyalty campaigns and blogger outreach efforts to amplify their message and create some enduring buzz around their products and offerings. T-Mobile staged a flash mob-style dance routine at London’s Liverpool Street station that has become a YouTube sensation, generating over 5.5 million viewings from around the world in the first four weeks. Not a bad return on investment.

As these big brands are showing, smart companies realise they still need to promote their products and services to customers – they just need a more cost-effective and accountable way of doing it.

This new way of thinking is not just to impress the CFO. The truth is traditional and previously-proven forms of marketing are no longer as effective as they once were. In 2009, companies are demanding more concrete benchmarks for the success of advertising and marketing campaigns as they are confronted by evidence that once passive consumers are tuning out TV adverts and ignoring fancy banner ads and microsites. Where companies once dictated marketplace conversations, in a social media world they are now just one part of a vibrant and vocal community. As Coca-Cola’s VP of marketing Carol Kruse succinctly put it: “Our customers control our brands”.

A decade after the birth of Blogger, five years since the arrival of Facebook and three years after YouTube took the world by storm, the social media culture of commenting, tagging, poking, tweeting and creating mashups has become second nature for tens of millions of people around the world.

Major brands, at first slow to understand the power of this customer revolution, and then overly defensive once they began to appreciate its potency have embraced the give-and-take of social media conversation to the extent that over 350 top brands are now actively “engaging” with their customers online. Increasingly these companies are beginning to break down the walls preventing effective customer relationships that were built up (by them) through decades of “we know best” advertising, PR and marketing.

But while the rush is on to build a social media status, most companies and brands are still wary of how to navigate the social media world even as they grasp the opportunity and savings it offers them. Simply put, they want to know how they can achieve more from their marketing budgets when they have less money to spend even as they adapt and cater to the new consumer demands of today’s “marketplace”?

We believe the answer lies in a very simple (and natural process). Brands must start by listening and understanding what customers really care about. Then, and only then, brands can begin conversing effectively with customers about the products and services they offer. Get that right and soon both companies and customers are listening to and learning from each other. And that provides a measurable metric of how this meeting of mutual interests is raising the profile of the brand. Best of all this can be achieved at a fraction of the price of a £1 million scatter-shot TV ad or even a highly targeted yet-intrusive direct market campaign.

Engaging, compelling and measurable online marketing is what social media conversation offers. But first, just like T-Mobile, you’ll have to learn to do the dance.

- Matthew Yeomans and Bernhard Warner