On Thursday, Instagram revealed that the monetization of the site will start slowly with "a focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands that are already great members of the Instagram community." If an Instagram user sees an ad he/she doesn't like, the ad can be hidden and feedback sent explaining why the user was displeased with the ad.
This explanation sure beats the ToS change that took place on a December morning last year which had the entire Instagram community up in arms as users thought that their photos would be used in ads without re-numeration. Instagram quickly pulled back from the ToS change and a class action suit against it was dismissed.
Instagram wants to grow into a "sustainable business" and while this is going to happen slowly, it is indeed going to happen. The only thing is that we don't know when the ads will start up on the site.
source: Instagram via AndroidCentral