Why is Google Image Search Penalising Images That Show URL'S as Watermarks

It was a costly mistake which I won't be making again and hopefully after you've read this article you will steer clear of the same problems with google image search that I had.

What's the Problem?
Now I don't really know why this is happening but Google image search is demoting my images from image search results that contain a url watermark over the image.

How do I know this is happening?
I've had dozens of domain names and websites hosted on different servers over the years, some dot com's some dot co.uk's.  A number of years ago before it became bad practise to duplicate a website on the dot com and dot co.uk I uploaded many images to each site, all of which were maps of some kind, usually UK postcode maps. As I became more compliant with Google's terms and conditions I stopped duplicating textual content across my domains and consolidated them  all under one primary domain name - www.gbmaps.com.  Google image search was just starting to become useful and after analyzing my websites visitor statistics I noticed that I was getting a small amount of traffic from google image search and people searching for uk postcode maps. This was great and I decided to leave the images where they were rather than removing them and losing the small amount of traffic that I got from them.  
Fast forward to a couple of months ago and Image search was delivering thousands of visitors to my site every day which was great. While doing some research into mapping and SEO on my site I noticed that some of my map images had been stolen by a site called ImageKB. This site displays images it finds on website and inside googles image search and displays them on their site as an embedded image. It is not possible to see where the images are located or return to the site where they came from so ImageKB are passing those images off as being their own. 

This really got my back up!!
So.. without a second though I went on the offensive and hatched a plan that would thwart these image pirates and turn the table to work in my favour.  It turns out that ImageKB had stolen at least 50 of my highest ranking images, so I went to my server, downloaded the originals and using Adobe Illustrator and Photoshop, I placed a bold watermark at the top of each image with just my website URL shown.  When the image thieves displayed my images on their site as if they were their own, a BIG www.gbmaps.com would be displayed and visitors to that site would know where the images originated from, problem solved.
Oh how happy I was.. my plan had worked like a charm and within a couple of hours I could see a lovely big URL of my website all over the offending website's image results pages.

I'd WON..  I was on top of the world!! ...I was still on top of Google's image search results and my URL was plastered all over ImageKB's site which was most satisfying.

Fast forward another month my grin had worn off and a feeling of despair came over me!  ImageKB had practically vanished from Google which made me smile but then I noticed that nearly ALL of my postcode maps had disappeared from Google. Not a single one of the maps that I'd placed a URL watermark on was listed on google's image search, website visitor numbers dwindled and the magnitude of my mistake was beginning to sink in. 
Remember when I told you I'd left duplicate postcode map images on one of my other domains (the dot co.uk), I didn't bother putting the watermark on those images because I thought they were long forgotten by Google. I was wrong, some of the images on my old redundant domain had now appeared on Google's image search, none of which showed a URL watermark. This proved to me that it was indeed the fact that I had modified the images to include a visible URL on the image.

I need to tell you just how difficult it is to remove a watermark from an image once you've created it.. virtually impossible!! So I had to recreate over 50 optimised uk postcode map sample images without watermarks. Upload them to my hosting platform and link them into the website which took an eternity.  I was aware that google may have flagged the actual image names as being 'offending images' under some unwritten rule about not having url watermarks within images so the names of each of those images were changed along with the links in the many pages I had which linked to those images.

The moral of this story is.. "don't put URL's in watermarks over images that can be readable by Google's amazing image recognition algorithms".

>> More tips on getting your images found in Google Image Search.