An authentication factor is something used to prove someone's identity, such as a user ID and password, a one-time...
password (OTP) token or smart card. Biometric devices are another possibility; they measure a unique physical characteristic of a user, like their fingerprint, voice or face. The key difference is that an authentication factor is unique to the individual, while a digital watermark is unique to a piece of content. Also, an authentication factor is used for granting access, while a watermark is meant for tracking malicious use, like the illegal copying of copyrighted data.
On the surface, it might appear that a digital watermark embedded in an image in a Web site could be used to protect against phishing attacks. The hidden watermark could be used to identify a legitimate Web site, distinguishing it from a bogus phishing site used for stealing credentials.
But as with anything else on a Web page, the watermark -- especially if it is not encrypted -- could be lifted inadvertently by a clever phisher that builds a mirror image of a targeted Web site. Since the watermark identifies the site, not the user, it doesn't really identify anybody. So while digital watermarking can be an effective tool for protecting copyrighted digital media, it shouldn't be used for authenticating systems.
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