An image overlay is a .png image file that can be drawn onto the map display, primarily to support presentations; for example, you can add .png files that represent legends, logos, advisory text such as "Confidential" or "Draft", .png copies of PowerPoint slides, graphics that frame the display or other information. You can add any number of image overlays to the map. All image overlays display in front of any layers, notes, and the basemap; you can position, resize, set a transparent color, and change the display order of any image overlays in relation to each other. Any transparency originally stored in the image is maintained. The .png specified can be a file on disk or a file on a Web server.
To add an image overlay to the map
On the Home tab, in the Map group, click Add Content and then click Image Overlays.... You'll see a dialog you can use to browse for image files (*.png). Click Open to add the overlay to the map.
Learn more about working with image overlays.