Search is from Mars, Content is from Venus

Google's search and content networks are both great sources of profitable traffic, but they are very different from one another. And in the same way that you wouldn't want unrelated keywords grouped together in your account, you're going to want to keep search and content in their own distinct campaigns.

But what is it that makes them so different?

Audience:
Traffic from the search network is coming from an active group of prospects. This is exactly what makes paid search advertising so unique: you get to show your ad to a prospect at the precise moment that they are seeking your product or service (depending on your keyword list of course).

On the other hand, traffic from the content network is much more passive. You're getting your ad served at a moment when their attention is elsewhere, focused on the content of the site they're on.

Performance:
This variance in user behavior between search and content leads to a large difference in performance. Due to the high level of motivation found in search traffic, the search network tends to have a much higher CTR than content. However, the number of impressions available on content tends to be vastly greater than available search impressions for a given keyword theme since AdSense can be found on so many sites throughout the web, so you can still pick up plenty of clicks from content despite the low CTRs.

Search traffic also tends to convert at a higher rate than content for the same reason. Searchers are pursuing your product or service so they are more likely to become customers after they hit your site than traffic from the content network. Because of this, click prices on the content network are often much lower than search. So, even though conversion rates have a tendency to be lower for content, if the average CPC and conversion rate drop by the same proportion when compared to search, then both networks will be equally profitable.

Targeting:
When considering keywords for search, each keyword is a unique entity that you bid on with its own separate performance from all other keywords in your account. With content however, Google takes a look at all of the keywords in an ad group and applies that ad group a theme that it will use to serve your ads across the content network.

For this reason, search and content ad groups need to be organized differently. There are a lot of keywords that you'll want to throw into content ad groups to round out overall themes that you wouldn't want to put in a corresponding ad group.

An example of this would be adding the keyword "cheese" to a content campaign focusing on Gouda. Also, Google only uses up to 50 keywords from an ad group to determine a theme, so any keywords over 50 in an ad group is always a waste for content.

In Summary:
Due to the major differences between search and content, you would be remiss to try targeting both in the same campaign. They require different keyword organization, ad copy, and analysis for optimizations and targeting both networks in one campaign makes it impossible to do.

Make sure to utilize both networks though, as they both have the potential to be very profitable for your company; just make sure to split them up in your account.