To add a watermark, go to the “Design” menu.

After you create and insert a custom watermark that you will reuse:

• Open the header pane (double-click in the header, or right-click there and click Edit Header).
• Click on the watermark to select it. You should see the selection handles at the corners and sides of the watermark.
• Press Alt+F3 to open the Create New Building Block dialog.
• Enter a name for the watermark.
• In the Gallery dropdown, click Watermark.
• In the Category dropdown, the first time you do this, click Create New Category and enter a name for a group of watermarks. If you start the name with an underscore, the group will appear at top of the Watermark gallery. For later watermarks, you can choose the same group or create another category.
• Enter a description (this step is optional).
• In the Save In dropdown, choose which template will store the building block. If the current document is based on a specific template, that template will be in the list; otherwise you'll be shown only Normal.dotm and Building Blocks.dotx (which are specific to your computer).
• Click OK.
• On exiting Word, if you're prompted to save the template you chose above, say Yes.

The building block you created will now appear in the gallery when you click Design > Watermark.