Encoding.com's watermarking feature does not yet support semi-transparent masks, alpha-channels and a few other potential image features. The watermarking process is based on plain colors, meaning, all pixels should be at 100% opacity and use black (HTML color code: #000000) to produce optimal results. Please also refer to the logo placement help guide for further reading on how to get the service working for watermarking:

http://encoding.com/help/article/how_to_place_a_logo_watermark_in_your_movie/

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