Did you load a dummy program on the arduino like below first before connecting the ESP8266 to the arduino? Do you have the serial monitor set to the appropriate baud rate and with proper line endings if needed?
void setup() {
// put your setup code here, to run once:
}
void loop() {
// put your main code here, to run repeatedly:
}
A previous discussion where somebody may have been successful without using level shifters. Not really sure how the level shifters actually play into the TTL communication setup.