Mapping Center Answer:

The best solution would probably be variable-depth masking, unless you have a background that is only one color. If you do have a single color background, you can use a halo effect on the text – make the halo the same color as the background.

More often, you will have a multi-color background (e.g., a hillshade with a layer tint). For this, use variable depth masking which is a drawing technique for hiding parts of one or more layers. It helps to clarify the legibility of a map that is packed with text and features. With this technique, you create a polygon mask layer based on an annotation layer, and then mask out some feature symbology to make the map more readable. For your case, you will create masks for contour line annotation so that the lines are labeled more clearly.

The first thing you need to do is create annotation from the contour line labels. You can right click on the layer with the labels and select Convert Labels to Annotation. Variable Depth Masking requires geodatabase annotation so be sure to select the option to store the annotation in a database.

In ArcInfo 9.x, in ArcToolbox, there is a Cartography Toolbox that contains the masking tools. To create masks for the annotation, use the tool that creates mask polygons at a specified distance and shape around the features in the input layer. This is the Feature Outline Masks Tool.

Use it to create some masks for your contour line annotation layer. Click the Input Layer dropdown arrow and select the annotation layer you created. Then type the name and location for the Output Feature Class. Because you’re using an annotation layer, the reference scale will be automatically set. Type a value in the Margin parameter – we will often use 1 point – and click the Mask kind dropdown arrow to select an outline method.

We’ll usually use Convex Hull which represents the shape of the text, but not the internal holes. This is the recommended method. Now click OK.

For Variable Depth Masking to work, the mask layer must be in the data frame. Right-click the data frame in the table of contents and click Advanced Drawing Options. Check “Draw using masking options specified below”. You would uncheck this if you wanted to turn masking off. Click the layer to use as a mask in the Masking Layers list – that should be the annotation mask layer you created. Then check the layers you want affected by the mask – those would nominally be the contour line layer(s). Click OK.

At this point turn off but don’t remove the mask layer. You should now be able to see legible contour labels!

Note that this is also described with accompanying graphics in the presentation we gave at the 2004 ESRI User Conference titled "ArcGIS Cartography: Creating Advanced Effects for Cartography in ArcMap" – scroll down and you will find it on the Other Resources – Presentations page of Mapping Center.