There is a HUGE difference between a company using personal data about you to target marketing to you, and company taking data (photos in this case) provided by you (or by a third party about you) and using it to market products to others.

If I see an ad about (insert product name) in my (insert Google product) stream, it is something that only I can see. If you see a picture of me (perhaps uploaded by a "friend" to a site like instagram) used to advertised products to you, then my privacy has been severely breached.

Google has an ad network. I know they are collecting data about me and using it to deliver targeted advertising to me. I also know that the information google collects on me is their competitive advantage, and it's in their best interests not to sell it to a 3rd party.

You should only be afraid of services that have to apparent revenue model, because you've got no idea what they're doing with your data. When the use of your data is clear and well known, you can make an informed decision on whether or not to use the service.