A watermark is simply text or an image that is set behind the main content of a page to communication some information to the reader. Watermarks can add a professional look to documents and can even be used to add a personal touch to letters and non-business documents.
Since a piece of paper can’t contain multiple layers of text, watermarks are printed on a page as a faded or subdued text or image so as not to interfere with the reading or viewing of the main content on the page. Word 2007 makes it easy to add built-in text, custom text, and image watermarks on the pages of a document.
Insert a Built-in Watermark
To add a watermark to a Word 2007 document, begin by clicking on the Page Layout tab on the Ribbon and clicking the Watermark button found on the Page Background section.

Notice that Word 2007 gives you the option to add a built-in watermark from the examples listed. Click on any one of the built-in watermarks and Word will immediately add the subdued text to every page of the document.

However, the built-in watermarks don’t offer many options when it comes to text placement or the text that’s displayed. For that kind of control, you can add a custom text watermark.
Insert a Custom Text Watermark
To add a custom text watermark, begin by, again, clicking on the Watermark button on the Page Layout tab. At the bottom of the menu, choose Custom Watermark to open the Printed Watermark options box.

Notice that there are three choices. Click the option titled Text Watermark.

Now, you have complete control over the text contained in the watermark and the way the text is displayed. For example, you can choose the language, font, font size, color, direction, and transparency of the watermark. Below is just one example of the customization Word 2007 offers when it comes to displaying a watermark behind the content of your document.

However, Word offers one more type of watermark. You can insert image watermarks to add a professional or personal look to your documents.
Add an Image Watermark
To add an image watermark to your Word document, begin by, again, clicking on the Watermark button on the Page Layout tab and then clicking on the Custom Watermark option. When the Printed Watermark option window opens, select the Picture Watermark option.

Click the Select Picture button and navigate to the picture you want to insert. Click on the picture you want to use. If your picture contains a high saturation of color or is a high-contrast image, you will get better results if you choose the Washout option next to the Scale drop-down menu. Depending on the size of your image, you will also have to play with the scaling to get the watermark to look the way you want it to look on a printed page.

When done selecting the options you want, click the OK button and Word will insert your custom image as a watermark on the page.
Word 2007 offers some impressive and simple to use options for adding built-in text, custom text, or a custom image as a watermark in your document. Watermarks are great for adding information about the content of your document and can be used to add a professional or personal touch to any document you create in Word.