For a custom watermark, you can use either text or a picture. These steps show how you'd create a picture watermark.
On the Page Layout
tab, click Watermark
to open the gallery.
Click Custom Watermark
, at the bottom of the gallery.
Click Picture watermark
, and select your picture. Use any image on your computer, or clip art in the Microsoft Clip Organizer. Note that you can scale it and select to wash out the color so it's not as visible behind document text.
Your result might look something like the example shown.
If you want a custom text watermark, select the text from a list in the same dialog box shown in this picture or type the text you want. You can select font, size, and color, plus set transparency and choose a diagonal or horizontal layout.
You can save your custom watermark to the gallery so it's easy to apply next time. You'll see how in the practice session.