I would say that social media success is gained by being all three.
Observe, respond, engage. And the observation part comes first. Why, you ask?
Well, Twitter is not a broadcast channel - it's two-way conversation condensed into the most popular micro-blog on the planet. Imagine going to a party, jumping onto the nearest table and screaming, "HI EVERYBODY, LISTEN TO ME, LISTEN TO ME, LISTEN TO ME" over and over and over and over again. The response would be less than favourable.
Rather, try turning up to the party, see who's attending, listen, mix, mingle, observe, add conversation where valuable or helpful, engage the most interesting individuals, make a point of passing on contact details, and leave after a fabulous evening.
Social media is pretty much the same - if you use the broadcast method only, it's a waste of valuable social media space, and audiences switch off rapidly. And when they're gone, they're not coming back any time soon.
Try observing, learning, listening. A few responses, some engagement, add value and help. Give, give, give.
It reminds me of the first ever offline business networking meeting I attended, and the group organiser stood up to do the introduction bit about the networking organisation. She said "So, what's the more successful type of interaction in networking terms for your business - being a Hunter or a Farmer?"
I answered: "Both"
Farming and developing contacts for future business, as well as Hunting new business opportunities. At the right time and for the right reasons, of course.
Try it with your social media engagement. Observe. Respond. Engage.