Specifically, how is his example of a celebrity's silly picture being used by Instagram to advertise a silly product plain wrong ?
I also fail to see how he comes across as entitled in his post. He's merely expressing a concern, one that, at face value, seems to be pretty valid.
To me is seems like the ads are going to be more along the lines of promoted restaurants and/or venues using photos the people you follow have taken. IG basically knows where everyone goes based on people voluntarily tagging images, and can now serve ads based on that in the same way FB serves ads from pages you like.
An ad that says, 'Your friend recently went to X (with a photo they took at said venue)', is a pretty engaging advertisement in my mind.