Youtube doesn't produce the videos. Are you suggesting they should re-encode them with the ads inserted into that particular video file? That seems worse, with little gain. Plus think about all of the additional storage and streaming cost required for that, because you'd have to duplicate that ad in all the videos now. Meaning each 15sec ad would add a tiny bit to each of 1B videos, instead of just being a separate 15sec video all by itself. And separate cached in all the places where that video is cached.
This is a bad idea.