Not really. They can precompute those and inject it in an MP4 file so long as the settings match and it's inserted right before an i-frame so that it doesn't corrupt b-frames. They already reencode everything with their preferred settings, so they only need to encode the ads for those same settings they already do. Just needs to be spliced seamlessly.
But YouTube uses DASH anyway, it's like HLS, the stream is served in individual small chunks so it's even easier because they just need to add chunks of ads where they can add mismatched video formats, for the same reason it's able to seamlessly adjust the quality without any audio glitches.