A novel approach for adaptive visible watermarking algorithm using Hadamard transformation technique is proposed in this paper for copyright protection of digital images. In this work, watermark is inserted into luminance component of a cover image and hence the proposed scheme could be used for both colour and monochrome images. In order to maintain quality of the given cover image as well as the visibility of inserted watermark, calculation of scaling and embedding factors is automated using the content of cover image. The performance of the proposed watermarking algorithm is tested with different types of greyscale/colour images and the results show the efficiency of the proposed work. The visibility of embossed watermark is evident from the results obtained without much degradation in quality of the underlying cover image. The statistical observations further strengthen the claim. © 2013 Inderscience Enterprises Ltd.