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An SEO proposal is a crucial tool for agencies to attract potential clients, serving as a sales pitch that outlines what the agency can deliver and why clients should choose them. It is important for the proposal to differentiate the agency from competitors, as prospective clients often reach out to multiple agencies. The proposal helps set clear expectations regarding services and timelines. The video by Rondel from Agency Analytics discusses the essentials of creating an effective SEO proposal and encourages viewers to subscribe for more digital marketing tips. A free template for crafting an SEO proposal is also provided at the end of the video.