The addition of this setting coincides with Instagram's further exploration of E-commerce, which will see more brands signing up to promote and sell its products using advanced customer tracking and marketing insights. These features will essentially allow data from other apps to create a personalized ad experience for each user. Recognizing ads relating to their activity outside of Instagram may alarm users, prompting the platform to add an opt-out option ahead of time.
Instagram is late to the game because earlier this year, Facebook added a similar setting to its platform with the introduction of its 'Off-Facebook-Activity' tools.
As data privacy is an important and sensitive subject for Instagram users, an in-app notification will be promptly sent to all users, alerting them to check out their ad settings. If a user has a connected Facebook account, the ad settings on Instagram will reflect those on Facebook.
Adding this feature could prove to be very lucrative for both Instagram and sellers, as fewer users are likely to opt-out at this time. If a large number of users allow Instagram to use off-platform activity in ads, direct sales made through the app will increase as users are more likely to click on material tailored to their interests and hobbies.
Time will tell if Instagram introduced this setting at the right time, as the platform continues to pick up steam in E-commerce.