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The video tutorial teaches how to add watermarks to documents using PDF Exchange Editor. Watermarks can be used to protect documents, indicate ownership, and prevent counterfeiting. Watermarks can be added in text or image format. To add a watermark, click the organize tab, then the watermarks drop down menu, and select add. The add watermark dialog box allows for customization of text or image watermarks, including font and alignment options. Macros can also be used for further customization.