Hi @Jyo234678,
I am not sure what exactly did not work on your end in terms of using OOTB Add Watermark step. Nevertheless I did quick check on my local AEM 6.5.12 and it's working perfectly. I've followed below guide from Adobe:
Please make sure that you are aware about limitations of supported file types, but also the fact that you have to put in proper place Add Watermark step in the workflow before Process Thumbnail step. Anyway everything what you need is included under above documentation.
You can also have a look into Rendition Watermarker that is part of ACS Commons, details can be found here:
I would suggest in first place to try one of above options, before you decide to create custom one.