The trick to editing watermarks is knowing that a watermark is usually part of the header, even though it appears in the middle of the page.
- Double-click near the top of the page to open the header.
- Click the watermark to select it.
(Try moving the cursor over the watermark until the cursor displays a four-headed arrow.)
Now you can drag the watermark to change its position on the page, and you can edit it based on what kind of watermark it is.
If it's a text watermark, you'll have the WordArt tab available. To change the watermark text, select Edit Text from the Text group, enter the new text in the Edit WordArt Text dialog, and then select OK.
If it's a picture, you'll see the Picture Format tab when the watermark is selected.