GenAds: A Gen AI for E-Commerce Case Study with Mercado Libre and AWS

Executive Summary

Mercado Libre needed a way to help tens of thousands of small sellers compete on visual quality — without requiring design budgets or agency relationships. Together with AWS, Mutt Data built GenAds: a Gen AI for e-commerce creative system that automatically generates professional banner ads for sellers at scale, using Stable Diffusion and Amazon Bedrock.

The results across 7 Latin American countries:

• +25% average CTR increase in LatAm
• 90,000+ creatives generated through GenAds
• 45% increase in display impressions from Display Ads
• Deployed across the 3 largest economies in the region

What started as a solution for SMB sellers became one of the most impactful applications of Gen AI for retail media in Latin America.

Introduction

Gen AI for e-commerce is moving fast — but most of its real-world impact is still happening quietly, behind the scenes of the platforms you shop on every day. This is one of those stories. Mercado Libre, AWS, and Muttdata joined forces to solve a stubborn problem: how do you help tens of thousands of small sellers produce high-quality banner ads, without a design team or a big budget? The answer was GenAds — an AI-powered creative tool built on Amazon Bedrock that generated 90K+ ad creatives, drove a 25% average CTR increase, and scaled across 7 Latin American countries.

Gen AI for e-commerce is moving fast — but most of its real-world impact is still happening quietly, behind the scenes of the platforms you shop on every day. This is one of those stories. Mercado Libre, AWS, and Mutt Data joined forces to solve a stubborn problem: how do you help tens of thousands of small sellers produce high-quality banner ads, without a design team or a big budget? The answer was GenAds — an AI-powered creative tool built on Amazon Bedrock that generated 90K+ ad creatives, drove a 25% average CTR increase, and scaled across 7 Latin American countries.

The Company

Mercado Libre is the largest online commerce and payments ecosystem in Latin America, operating in 18 countries and offering comprehensive solutions across the entire e-commerce value chain.

The Challenge: Why Gen AI for E-Commerce Creative Is a Game-Changer for SMBs

In e-commerce, the visual impact of product images is often the deciding factor in a successful sale. High-quality visuals significantly shape a potential customer’s experience, yet creating compelling display ads remains a challenge for many vendors. It’s a process that demands time, expertise, and resources.

This includes understanding the buyer persona to designing and producing multiple versions of promotional images. For small and medium-sized businesses (SMBs) limited budgets and resources often prevent them from accessing professional agencies that could elevate their product promotions. Many sellers also underestimate the power of well-crafted banners in driving visibility and sales.

Considering that 80% of Mercado Libre’s sellers are SMBs, they were looking for a solution tailored to empower SMBs and accelerate their growth on the platform through its ad products. This innovation comes at a time when digital advertising is booming, projected to grow by 6.5% in 2024 to $442.6 billion, representing 58.8% of global ad spend. Retail media is at the forefront of this growth, with a 17.2% CAGR over three years — making Gen AI for retail media one of the highest-leverage investments a platform like Mercado Libre can make right now.

Retail media spending alone is expected to climb by 10.2% this year and 10.5% next year, reaching $141.7 billion and accounting for 13.6% of total ad spend (Source: Dentsu and Mobile Marketing Magazine). In this thriving landscape, solutions that enhance ad performance and metrics aren’t just relevant— they’re essential for sellers aiming to stay competitive and succeed .

Digital advertising is set to grow by 6% in 2024, reaching $442 billion, with retail media growing at an impressive 17% CAGR over the next three years.

Solution: GenAds, Automated Generative AI Images for Seller Ads

We worked closely with Mercado Libre to develop a cutting-edge solution to streamline the creation of high-quality product images for its sellers. Leveraging AWS’s robust infrastructure and AI tools, the companies collaborated to create GenAds, an innovative, AI-powered tool that empowers small and long-tail sellers to quickly go to market with visually impactful product listings.

Here are a few images created with GenAds.

How GenAds Works

Mercado Libre kicks off the process by pre-selecting sellers and their products using performance and popularity metrics. From this initial group, products are further curated for advertising purposes. By leveraging Stable Diffusion within Amazon Bedrock, the tool produces generative AI images that place products against visually appealing backgrounds — automatically, at scale, with no designer required.

Only the most visually captivating and technically precise images pass the final review, meeting strict advertising standards such as high resolution and proper cropping. This automated process not only lightens the load for sellers but also speeds up the creation of impactful ads, helping Mercado Libre’s sellers capture customer attention and succeed in the competitive e-commerce arena.

GenAds streamlines ad creation for sellers on the marketplace. Sellers can list items and opt for display ads featuring automatically generated banners. Each week, category-based backgrounds are generated. The system generates a fresh set of category-specific backgrounds using AI, ready to be matched with seller products. Every day, it automatically identifies the most popular and visually strong items in the catalog, then uses a large language model to compose prompts that blend each product seamlessly into the right background — producing finished banner ads that are ready for campaign activation with no manual work.

Using Stable Diffusion via Amazon Bedrock, stored in Amazon Simple Storage Service (Amazon S3), and indexed in Amazon DynamoDB. Daily, a selection mechanism identifies popular and visually appealing items, and Anthropic’s Claude 3 Sonnet model creates prompts to blend these items with the backgrounds, forming banners that are stored similarly. Finally, an API enables the front end to retrieve and display these banners for ad campaign proposals.

Results

If you're exploring what Gen AI for e-commerce could look like for your platform — whether it's creative production, audience targeting, or something else entirely — we'd love to share what we've learned building this at Mercado Libre scale. Book a call with our team.