I noticed in my Adwords account that smart pricing come into affect only for Content Ads. For Search Ads no smart pricing. Is it true that smart pricing only affects Adsense Publisher ads not search ads. If so Can I select the option to show my ads only in content ads?
Smart pricing is only available on the content network. I think one of the reasons for the smart pricing on content ads but not search ads is that Google has pretty good control over the context in which ads are displayed, whereas they have significantly less control over the content network. That said, they can see how well traffic from each Adsense advertiser converts, and if they notice an advertiser generating lots of traffic but no conversions, then that publisher is smart priced out of their spammy publishing ways. Now to your question - On the Adwords Campaigns page, check the campaigns that you want to make content only. Then click the "edit settings" button. In the right hand column, you should be able to choose which network(s) you would like your ads to appear on. My advice is that if you're planning on using the content network just because of the smart pricing, keep in mind that any smart priced traffic you get will probably be very poor quality. I'm not sure that smart pricing in and of itself is a good reason to go content network only.
Many advertisers won't touch the content network - besides the click fraud, you'll probably find the conversion is much worse and the lower price will wind up costing you more per conversion. Sites are smart priced because they have poor conversion. Having ad copy that converts well on the search network will place your ad ahead of advertisers bidding and paying more per click.