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An SEO proposal is a crucial document for growing agencies, serving as a sales pitch to potential clients and a means to secure new business. It outlines the agency's capabilities and builds trust with prospects who may be considering multiple agencies. Key elements include setting client expectations and showcasing the agency's value. The tutorial provides guidance on how to create an effective SEO proposal, emphasizing its importance in differentiating the agency from competitors. Additionally, a free template for crafting an SEO proposal is offered at the end of the video.