A method of placing a watermark in a video stream estimates motion between frames in the video stream, and computes a representative motion for a frame. Before embedding the watermark in that frame, the method spatially adjusts a digital watermark by the representative motion. This method is particularly suited for embedding a watermark in a video stream compressed using motion estimation. In this case, the method uses the motion vectors in the video stream to compute a dominant motion for a frame, and then shifts the watermark by this dominant motion before embedding it in the frame.