This post is actually answering the question of one of my YouTube video visitors, about creating a PNG watermark for YouTube inVideo Programming feature, which I posted here a couple months ago.
We will create the PNG watermark using Pixlr, a free image editor, which is web-based or online.
The result will be: my photo with subscribe text using yellow background, which you can find in all of YouTube videos on the top right. If you are YT channel owner and have a website, I recommend reading this, to add your website as an external link.

Steps:
1. Prepare your image, or any photos, and then visit pixlr.com/editor, and choose “Create a new image”

2. Because the perfect image size of the YouTube inVideo Programming watermark should be 800×800 px, which isn’t listed in the presets settings, we need to specify the width and the height ourselves.

3. Check on “Transparent” checkbox. Click OK button.
4. To import image in Pixlr at this point, you can go “Layer” then select “Open image as layer” on the drop down menu.

Navigate to your image.
5. If the image is too big for your canvas we need the Transform tool in Pixlr, go to “Edit” then select “Free Transform“.

You will see blue handle that you can use to resize the image.

Holding your shift key while dragging the handle, will maintain the aspect ratio of the image you want to edit.
Adjust the size of the image to fit your canvas.
6. Next, we will create the yellow square background for the “Subscribe” text. To do so, click “New Layer” icon in “Layers” tool bar.

7. Click “Drawing Tool” make sure it’s square, and choose the color you like, I have chosen the yellow color.


8. For the text, create new layer again, and grab the “Type tool” and type your text.

To adjust your text’s position, use the “Move Tool” to move the text around.


9. Once you like the result, you can save it, by going to “File” and “Save” and make sure;
- Name: Type the name of the image
- Format: PNG (Transparent, full quality)
- Click “OK” button.
That’s how you can use pixlr.com online image editor to create YouTube watermark, obviously, you can create PNG files for anything else.