When I began my business online, I had no thoughts about watermarking my images as I was just thrilled that the world would be exposed to my creative ideas. Then I had a rude awakening when someone stole my photos and claimed that they were the owner, thankfully, I was able to prove they were my images, but it was a long and difficult process.
In the meantime, I've found an awesome site online that is simple and easy to use and the results are great!
There's really no safer way to sign your art/image than to add a watermark. Yes, the truly unscrupulous will still find a way to steal it, but most people are very glad to know who to contact to ask permission to use the image.
So ultimately my 3 reasons for watermarking an image:
1. So it's easy to identify the owner of the image.
2. As a marketing tool, it allows people to find my website when they see the image.
3. It also works as a "BRAND" of the image...it may travel around the world millions of times via the internet, but if the brand is on it...it's yours!
When using it for a design, keep in mind that it's not a good idea to put the watermark across the part of the image that you hope to sell...it will only detract the potential buyer.
However, when I sell certificates or prints, I do put a very delicate watermark branding on it in several places to make it more difficult for it to be copied and printed. This has increased my sales because it's no longer easy for the person to make a copy without paying for it.