• by Erik Sass , Staff Writer @eriksass1, October 12, 2015

Bauer Xcel, the digital arm of global publisher Bauer Media, has seen its online audience soar in recent years -- but that’s not enough for the Germany-based publisher, which hopes to build a billion-dollar business in online transactions spanning verticals including travel, finance, health, gaming and e-commerce, according to Bauer Xcel Media president Christian Baesler.

He shared some of these plans during a keynote interview at MediaPost’s Publishing Insider Summit in Asheville, NC.

After years of eschewing digital media in favor of print newsstand sales, its traditional area of strength with titles like In Touch and Life & Style Weekly, Bauer launched Bauer Xcel in 2012 to manage all its digital efforts around in the U.S.

In February, the division was given responsibility for all digital efforts worldwide. That structure has a number of advantages, including allowing the company to create products in one country but then quickly duplicate them in other markets.

For example, in August, Bauer Xcel Media launched a new digital food destination, RecipesPlus, in the U.S., UK and Australia. By leveraging Bauer’s international footprint, the cooking network will be able to draw on the best recipes and other food content from each marketplace and publish them globally.

Separately, its aggressive social-media strategy has paid off with surging online audiences. From around 4 million unique U.S. visitors per month in 2013 on average, Bauer Xcel’s combined traffic has grown to around 23 million per month this year, powered by its celebrity and entertainment properties, including teen mag J-14 -- the largest teen editorial brand on Facebook, with 5.5 million fans for its English edition and 3.6 million for its Spanish edition.

With a small editorial team and most ad sales handled programmatically, the company has low overhead and high fill rates. But Bauer’s ambitions go considerably beyond that, according to Baesler, who explained that digital ad revenues, while growing fast, remain a relatively small part of Bauer’s total global business, which came to around $2.6 billion last year.

To accomplish this digital advertising revenues simply won’t be sufficient, Baesler pointed out, noting that average revenues per unique user for even the most successful digital publishers hovers around $0.05, or less: “In general we see that the revenue opportunity on the advertising side is quite small. It’s a nice business but our goal isn’t to go from $100 million in digital to $200 million, but how do we build the next digital company that generates a billion more in revenue.”

By contrast, participating in online transactions allows publishers to claim a much bigger piece of the pie, with revenues from converting users ranging anywhere from $0.20 to over $50 per user, depending on the product or service behind sold.

“In the more valuable channels, you get paid for helping to acquire a user, you participate on a sale, or you drive a lead. For example, if you have a car Web site, and someone signs up for a test drive for the new Ford, that’s $50 just for bring them an interested user,” says Baesler.

This strategy will involve launching or acquiring a number of parallel companies, operating as standalone brands in tandem with Bauer’s editorial properties. Of course, that’s a key advantage as Bauer already has access to established audiences, numbering around 150 million users worldwide across a number of verticals:

“We’ll convert these users to co-branded sites that we own and operate where they actually make the transaction and then keep them there, from a lifetime value model perspective. We don’t want to be the affiliate of Priceline that just gets a $5 commission once, we want to own the travel site that we can then capture users and remarket users over time,” he adds.