By displaying or publishing ("posting") any Content on or through the Instagram Services, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, worldwide, limited license to use, modify, delete from, add to, publicly perform, publicly display, reproduce and translate such Content, including without limitation distributing part or all of the Site in any media formats through any media channels, except Content not shared publicly ("private") will not be distributed outside the Instagram Services.
Yes, that's in the old TOS, and it's pretty much boilerplate for any site with user-generated content. That language certainly seems to me like it would cover uses in advertising or even Instagram reselling your images as a "stock photo" site. This kind of clause is required so that users can't attempt to entrap the service provider by uploading content and then claiming that Instagram didn't have a license to utilize it and therefore had violated copyright, and also probably as a fallback policy in case a cranky user spotted their image in a stream or feed or video or something (or, alternately, that the server is hacked and db is leaked, and thousands of claims of "unauthorized use" come flooding in).
IANAL but pretty much this is a non-story. They've simply decided to specifically inform you that a license to " non-exclusive, fully paid and royalty-free, worldwide, limited license to use, modify, delete from, add to, publicly perform, publicly display, reproduce and translate such Content, including without limitation distributing part or all of the Site in any media formats through any media channels" includes use in advertisement, as one would reasonably believe it does.