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In this paper, we propose a proximity-based indoor positioning system which is capable of monitoring mobile device user's indoor locations where the commonly used GPS signal is unavailable or weak. The designed system is aimed to be integrated into a context-aware communications system to prevent transmission of irrelevant content to all users but easing delivery of the location-based information. Similar to the beacon technology that assigns a code to each targeted position in an indoor location, our system labels the locations with audio watermark codes where user's mobile device monitors and receives the watermarked audio. The proposed encoder performs code-division multiplexing that allows insertion of several location indexes into the same audio file. Watermark embedded through spread spectrum improves robustness to noise and guarantees a satisfactory performance even though the mobile device has a low band microphone. The designed decoder installs synchronization between the mobile device and the watermarked audio emitter in real time, and extracts the embedded watermark code words assigned to specific indoor locations. This invokes the context-aware content delivery module and the delivery is initiated. Position displacements of the mobile users are estimated by the time-of-flight technique and the users moving within the coverage range of the emitters are continuously monitored. Decoding is achieved in real time that enables the mobile users to reach to content delivered from different emitters within their coverage range. Performance tests demonstrate that the developed system enables to estimate the user position within the 7-m distance from the emitter while keeping inaudibility. We reached 2-m spatial resolution in discrimination of different emitters. The proposed framework can be considered as a promising alternative to latest technologies, i.e., Wi-Fi-based fingerprinting systems or beacons. [ABSTRACT FROM AUTHOR]