The way that I used to watermark videos was to decompile an AVI or MPG into still frames in segments, and then use one of the free batch photo programs to add the watermark to it.
After this was done, I would reassemble the frames into an AVI again with a program like MakeAVI, and then use a free video editor (Windows Movie Maker works fine) to add the audio back and line it up with the video again.
It works well and is free, but takes extra time and more steps to do this manually
If you can afford to buy the software for it, it saves time and does that process automatically for you.
P.S: I just remembered that you can use a program called
FormatFactory to add free watermark and logos to your videos. It's normally used just for converting formats, but it does have the option to add a logo to it before you convert it. So you can convert it to the same type of format, and add the watermark for free to the output video when you do. :) This one actually is freeware, since there are no paid options or trials for it.
P.P.S: Youtube has an in-video function that lets you add a logo to videos if you are using youtube and have already uploaded them. If you need to add the logo to a video you'll upload to other places like Vimeo, or display through your own web site or pages using HTML5, then using FormatFactory will make it to where you can do it once and have the logo everywhere regardless where you upload it to.