This document presents a comparative analysis of DCT and DWT based digital watermarking techniques. It proposes algorithms for embedding and extracting watermarks in the DCT and DWT domains. The DWT technique is shown to be better for watermarking as it is more suited to the human visual system. The analysis finds that DWT provides better imperceptibility and fidelity than DCT, especially at lower embedding factors. However, robustness decreases with lower embedding factors. An optimal embedding factor of 10 is identified as providing a good balance between all evaluation parameters for the watermarking techniques. In conclusion, DWT is determined to be a better overall technique compared to DCT for digital image watermarking applications.