Server-side ad insertion (SSAI) is software that places ads into a video stream on the server, before the stream reaches the viewer. So viewers of the same show or the same live match can each see different ads, chosen for them. It is also called dynamic ad insertion, or ad stitching, because the ads are stitched into the video.
The older method is client-side ad insertion. There, the app on the viewer's phone stops the show, fetches an ad from a separate server and plays it. This often causes a pause or a spinning wheel. Ad blockers can also stop the ad. On cheap smart TVs, the switch between show and ad can fail altogether.
SSAI avoids these problems. The stream reaches the viewer as a list of short pieces of video, described in a small file called a manifest. Before each ad break, the broadcaster puts a marker in the stream, which says where the break starts and how long it is. When the SSAI server sees the marker, it asks an ad server which ads to show to this viewer. It then rewrites this viewer's manifest so that, during the break, the list points to the pieces of the ad instead of the show. To the viewer's player, the ad is simply more of the same stream. So it plays without a pause, and an ad blocker cannot separate it.
Here is a typical case. During a live cricket match, 1 crore people are watching on a streaming app, and a two-minute break begins between overs. The SSAI server receives 1 crore requests within a few seconds. A viewer in Chennai sees an ad for a gold loan in Tamil. A viewer in Delhi sees an ad for a new car in Hindi. A viewer with a free plan sees four ads, and a viewer with a cheaper paid plan sees two. Every ad has been compressed in advance into the same qualities as the match, so that the switch looks smooth.
The ads themselves are often sold by auction. The SSAI server can offer each ad slot to a supply-side platform (SSP), which sells it to the highest bidder through connected TV advertising. After each ad plays, the server reports it to the advertiser's ad verification company, which checks that the ad really played.
SSAI is how free channels on smart TVs earn their money. These channels, called FAST channels, are run by cloud playout software, which marks the ad breaks. SSAI then fills each break separately for each viewer. Several companies that do this for broadcasters around the world were founded in India.