I used to use this before it became easier to type in a circle.
The sample word in this tutorial is not a great example. It works better when you have more text. Two to five words minimum work great!

Anyway... here we go.

Note: these thumbnails are much smaller than the originals I worked with. I reduced the size to 200 px wide on each... so the size & perspective are off in some thumbnails.

The end result of this tutorial has to be reduced in size to look better, so always start with as large of a canvas as you can. You can always get smaller, but it's very very hard to increase the size of this one after you finish.

Step 1.
Open a new canvas.


Step 2.
Type your text.


Step 3.
Transform the text and stretch it up.


Step 4.
Flip it vertical.




Step 5.
Select an area twice as tall as the text.


Step 6.
Filter > Distort > Polar Coordinates


Rasterize test? Yes.


At this point you can accept the default results of the polar coordinates.

Step 7.
Free transform the text into the placement you want.


Final Image:
Here we see the final results. The image has been filpped around and resized. I added a little red dot to show that it can wrap around othe objects.


Remember... more words produce a much better result!