I've towed banners for 3 different companies - it was great fun. That picture is pretty distorted, though. On the pull-up, most times the pilot won't pull extremely steep except for some guys who try and show off. Like everything in aviation, different companies and different pilots use slightly different techniques. If you have a good feel for the airplane and with some practice, you can get the banner to lift up off the ground very nicely.
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How much drag does the banner put on the plane?
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It depends on the type of banner and the type of plane. They are pretty draggy, but the majority of banner planes have some extra horsepower to safely handle it.
Letter banners are made with big nylon letters attached to little poles- the poles get linked together to make words. A long letter banner is very draggy. A billboard is a big huge flat panel, like in the picture. The bigger, the draggier (is draggier a word?).
Most days went fine, but I've flown on a few hot days towing a good-sized billboard/banner (with a plane that was a tad underpowered for the job) where I was barely climbing and I had my hand near the banner release ready to drop while I looked back to make sure that the banner would clear the trees and powerlines. Sometimes it took a few miles just to get to 500' or 1000'. There were also times when I would deviate slightly off course to fly over a big asphalt parking lot or a building complex to get some thermal lift (like thermalling with a glider - works pretty good!).
Fun times!