Transforming Mercado Libre’s Paid Media Operations: A MarTech Success Story

Introduction

Mutt Data partnered with Mercado Libre, the largest e-commerce ecosystem in Latin America, to tackle one of its biggest marketing challenges: optimizing millions in monthly ad spend across diverse channels. Our collaboration led to a game-changing media optimizer that has saved time, driven revenue, and set new performance standards.

About the Company

Mercado Libre is the largest online commerce and payments ecosystem in Latin America. Through a suite of technology solutions including Mercado Pago, Mercado Ads, Mercado Envios, and Mercado Crédito, they enable customers in 18 countries to carry out their commerce offering solutions across the entire value chain.

The Challenge

Through our years of collaboration, Mutt Data has built multiple solutions for Mercado Libre intending to improve the performance of online ads' budgets. We’ve also worked together leveraging data to enhance their attribution model and boost their customer base. In this particular case, Mercado Libre sought help from Mutt Data to optimize online ads’ performance and meet the targeted ROAS and revenue goals across online paid media campaigns while maximizing volume. To do so, they were looking for solutions that would help them accurately forecast marginal marketing performance across hundreds of campaigns and perform spend optimization of different scenarios. As the biggest e-commerce retailer in Latam, Mercado Libre invests over $1.2 billion dollars annually in marketing across various channels. To enhance the efficiency of part of their online media budget, they needed a solution to closely monitor and forecast campaign performance and adjust those budgets swiftly and effectively. With Mutt’s extensive experience in MarTech solutions and a proven track record in optimizing budget allocations across select marketing channels, we were a natural choice. Leveraging our previous work on similar challenges, we quickly developed a tailored system for Mercado Libre, ensuring it was scalable and adaptable to their evolving needs.

What Does It Do?

The Paid Online Media Optimizer is a modern tool that automatically determines the optimal spend allocation for paid media campaigns and how best to configure their budget and bids to achieve it. The mix of campaigns can belong to a single ad platform or across multiple channels. The Paid Online Media Optimizer is 100% focused on marketing performance optimization. Along with the selected ad campaigns, it takes a spending plan and efficiency expectations as inputs. In the case of a weekly or monthly global spending plan, spending can be optimally distributed on each online channel through a planner. The Planner uses revenue forecasting to fulfill ROI expectations on each channel. Also, to allocate spending over each day, it has different Pacing strategies that take into account both daily and weekly targets. The Pacer can either prioritize spending the whole planned budget or maintain levels of efficiency every day.

So, how does the paid online media optimizer actually work? Let’s dive in.

How it Works

The Solution

1. Plans Daily Spending
2. It Captures Data and Leverages Historical Performance
3. It Analyzes Business Needs: Uses performance metrics to set limits during optimization (e.g., setting minimum ROAS to guarantee profitability).
4. It Optimizes Using Saturation Curves: Based on past performance.
5. Considers Spending Pacing: To increase or decrease daily spending.

7. Translates Optimized Data into Spend Allocation
8. Automates Campaign Updates: Campaigns are automatically updated in ad platforms to follow the optimizer's decisions.
9. Engages in a Feedback Loop: Returns to step 1 for continuous optimization.

Some of the Paid Online Media Optimizers’ Benefits:

• Maximized Revenue: Leverages Machine Learning to generate optimizations with one-click applications, increasing Mercado Libre’s ROAS and boosting its bottom line.
• Advanced Cross-Channel Insights: Access ad response curves for each campaign to understand saturation, marginal effectiveness, and identify cross-channel opportunities.
• Streamlined Workflow: Automation reduces campaign management time, allowing the team to focus on strategic initiatives.
• Planning, Forecasting & Pacing: Models multiple scenarios to determine the ideal budget allocation to reach daily, weekly, and monthly goals with optimal performance.
• Daily Recommendations: Optimizes campaigns and maximizes overall results with smart automation that monitors campaigns throughout the day, automatically alerting or pausing due to performance deviations.

The Paid Online Media Optimizer delivers daily recommendations to optimize campaigns and maximize overall results. It also enables the configuration of smart automation that monitors campaigns throughout the day and can automatically alert or pause due to deviations from desired performance.

The Implementation

The Optimizer is a platform that supports the Marketing Team’s POM Operations. Therefore, we needed to deeply understand how they operate and adapt the platform accordingly.

Daily optimizing and applying new campaigns’ bids and budgets according to past performance are critical to maximizing MeLi’s Marketing profits. So, we implemented several business rules as fallbacks co-designed with marketing analysts, in case full ML-driven optimization is impossible. The project involved both Software Engineering and Machine Learning Operations best practices. As an application that manages millions of dollars, it has extensive testing, both model and execution monitoring, scheduling and infrastructure management, and comprehensive reporting on each step of the optimization.

Continuous collaboration with the Marketing Data Engineering team was essential for the project’s success. The Paid Online Media Optimizer was integrated with Mercado Libre’s Data Lake, and all output data was stored directly in it to streamline access and analysis.

Results

• 9.6% Increase in Mercado Libre’s ROAS
• 55% Decrease in Time Spent on Campaign Management
  
  

Why Mercado Libre Loves Working with Us

Throughout our history, Mutt Data has conducted various projects to enhance MercadoLibre’s data capabilities with a special focus on MarTech and AdTech use cases. MercadoLibre has also chosen Mutt once and again to conduct projects related to Generative AI, Machine Learning, and Data Stacks. Mercado Libre and Mutt Data enjoy working with each other due to their teams’ expertise and professionalism. So the Paid Online Media Optimizer for MercadoLibre is not our only lap with this crew. Other joint projects include:

Multi-Touch Attribution

MercadoLibre needed to improve its online attribution system to measure the incremental lift of each ad touchpoint in conversion journeys, overcoming the limitations of traditional multi-touch attribution (MTA) models. Mutt Data collaborated with MercadoLibre to design and implement a new MTA platform using advanced deep-learning models. This platform accounted for channel interactions, time dependencies, user characteristics, and other business variables, enabling more accurate measurements of each ad touchpoint's true impact. The new attribution model allowed for real-time, campaign-level measurement closer to actual lift estimations. This improved the accuracy of marketing spend optimization, enhanced campaign performance, and informed better decision-making by providing insights into the effectiveness of various marketing strategies across customer journeys.

Boosting Mercado Pago's Customer Base

MercadoPago aimed to increase its Total Payment Volume (TPV) by expanding the range of products used by sellers and introducing new services. The challenge involved both identifying effective recommendations and implementing them through the best channels. Mutt Data developed a comprehensive recommendation framework using Machine Learning models to predict sellers’ propensity to use specific services. This system tailored recommendations based on delivery timing, channel interaction, service relevance, and message content. We significantly accelerated the ML model deployment process. The project led to a 4% nominal increase in sellers selecting MercadoPago as their primary platform, growing from 6% to 10%. Additionally, the implementation of monitoring best practices enabled real-time metric tracking through user-friendly dashboards, further optimizing the platform's performance and decision-making.

Mercado Libre’s Bidding System

Mercado Libre’s Product Ads Team needed to enhance their internal bidding system for promoted items. The existing batch process was suboptimal, leading to inefficient billing and revenue loss, especially for lower bidders. Mutt Data developed a real-time bidding system that optimized Click-Through Rate (CTR) and Conversion Rate (CVR) estimations for each item during searches. The system balanced the impact on Gross Merchandise Volume (GMV) while maximizing ad placement efficiency. It resulted in a more than 25% increase in advertising clicks without significantly affecting organic GMV, demonstrating the effectiveness of the real-time bidding system.

Mercado Libre’s choice to work with us on multiple projects is a testament to the trust we’ve built, thanks to our ability to deliver data-driven, measurable improvements across complex marketing and tech landscapes.

References

A Deeper Dive: For a more detailed technical view of our optimizer, watch this conversation where two experts discuss how it works.

Wrapping Up

Facing the challenge of optimizing a vast, complex ad budget across multiple platforms, Mercado Libre partnered with Mutt Data to harness advanced machine learning techniques for enhanced ad spend efficiency. Through the development of the Paid Online Media Optimizer, Mutt Data empowered Mercado Libre to manage and optimize hundreds of ad campaigns across multiple platforms seamlessly.

Ready to unlock the full potential of your ad spend with data-driven precision? Contact Mutt Data to discover how our expertise can elevate your MarTech capabilities.