Content-aware watermarks represent a new generation of digital watermarks where the contents of the image are taken into account at both embedding and detection times. In this paper, we present a performance analysis of a content-aware watermarking algorithm in terms of its impact on the perceptual quality of watermarked images using three different metrics. We also discuss the additional complexity involved in content-aware processing. Finally, based on our simulation results, we propose methods for achieving a better trade-off between watermark robustness and perceptual quality.