Easy step by step:
Click on the Word Art button. The box below will display:
If you want the bottom of the text to conform to the circle, choose the Word Art in row 1, column 3. If you want the top of the text to conform to the circle, select row 1, column 5. In the following example I have the bottom of the text on the imaginary circle. This box will open as shown below:
Select the font and size text you want as for any Office application. Type the text in the box and click OK.
With the Word Art text on the page, grab hold of the handles on either end and bend the text into the size circle you want:
Use the mover to move the text into position or the handles to bend and manipulate the shape. To put the text around a circular picture or graphic, place the graphic underneath the Word Art by choosing "Send to back" if it isn't already behind the text. Click on the Word Art to display the handles and press [Ctrl] and T at the same time to make the Word Art background transparent. The circular text will appear around the edge (or on top of) any underlying picture or graphic.
j.