South Africa's debut as top dogs in the Test world fell flat in Brisbane, their much-vaunted pace attack managing to prise only five wickets in the draw to leave the hosts claiming a moral victory and the momentum ahead of the second test in Adelaide starting on Thursday.
"The great thing is that there is respect for our performance," Smith told reporters at Adelaide Oval on Wednesday.
"I think if we had travelled a few years ago and drawn a test match anywhere else in the world, people would have been raving about it.
"For us a disappointment in a draw is good for us, it shows that people expect us to play well and to perform well and that's exciting for us.
"We come to Adelaide knowing there are a few areas where we can definitely improve on and we've had some good discussions about that.
"But in terms of the number one ranking, we know it's going to be a process of us performing well for a period of time and this is the big challenge for us and if we come through Australia having been successful, then it will give us a great opportunity to create something."
Life has been tough at the top of test cricket, with India and England relinquishing the premier ranking in little more than a year.
Since taking over the captaincy from Shaun Pollock in 2003, Smith has spent eight years piloting South Africa's steady rise to the summit, but could ultimately see his team lose their foothold should Australia win the series.
The Proteas' short reign has already been undermined by team selectors, who overlooked Imran Tahir in favour of a four-prong pace attack that drew little from the Gabba wicket.
Smith said it was "back to normal" with Tahir's reinstatement at Adelaide, where the pitch is expected to offer spinners turn after two or three days.
Tahir troubled England's left-handers in South Africa's victorious 2-0 away series to win the top test ranking and the Proteas skipper backed him to do the same against Australia, whose top three in the batting order are all southpaws.
"The nature of the wicket is that it does get drier as the game goes on but at the moment it's got a good grass covering," Smith said.
"So it should be a really good wicket for the first couple of days and then dry out as the test goes on.
"Hopefully there's a lot of rough, not for me, but for the Australian left-handers and (Tahir's) certainly used the rough well in the times he's played for us.
"He created a lot stress for Andrew Strauss and the left-handers in England so the wrong-un turning away from the bat is not a bad option.
"He's got enough to really contribute in this game."