A watermarking system comprises an encoding data processor operable to generate at least one marked version of an original item of material by introducing one of a predetermined set of code words into a copy of the original material item. The encoding processor comprises a code word generator operable to form the code word by generating a plurality of code word coefficients, and an encoder operable to combine the code word coefficients with the material item, and an adaptation processor. The adaptation processor is operable to adapt the strength of the code word coefficients or the material item samples in accordance with a relative sensitivity of the material item samples to carry the code word coefficients. The strength of the watermark is therefore adapted in accordance with the sensitivity of the material item to carry watermark code word coefficients. As a result there is a reduced likelihood of an attacker identifying parts of the material item to which the watermark code word has been added. A likelihood of a successful attack is thereby reduced whilst maintaining a desired false negative detection probability.The watermarking system finds particular application in identifying a point of distribution of pirate copies of video material generated by capturing the watermarked image, using, for example, a camcorder in a cinema.