Instagram ads will look like this
Instagram also put up a Q&A to remind subscribers that the site does not own pictures taken by you, the account holder. That was the controversy at the center of the ToS change that the site made late last year. Instagram did say that to determine which ads you are more likely to respond to, it will look at the people you follow on the site as well as pictures and videos you like. In addition, the interests you list on Facebook will also help determine what ads you see on Instagram.
The first ad is actually one created for Instagram itself which you can find in the slideshow below. Facebook originally paid $1 billion in stock for Instagram, a price that dropped when the value of Facebook's shares declined. Still, the purchase cost in excess of $700 million which is a lot of ad money that Instagram needs to produce to justify its purchase by Facebook.
source: Instagram (1), (2) via Phandroid