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We create custom watermarks(WM) for each recipient (e.g. their name is added to the watermark).
Currently we save the WM settings and use that as a template for the manually type their names in the Text area in each document (ugh)
Is there a way to use a mail merge type process to make this easier?
Do you mean do both a mail merge and watermarking the file at the same time? It can be achieved using a script.