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In this video tutorial, the instructor demonstrates how to reduce the size of an Excel file without deleting any data. The first step is to compress the picture size in Excel by selecting the picture, going to Picture Format, and selecting Compress under Adjust. Different options are available to compress the picture format, such as choosing 220 ppi for printing. An alternative method is to go to File, then More, then Options, then Advanced, and scrolling down to Image Size and Quality. Ensure that "Discard editing data" is selected and "Don't compress image file" is unchecked. This allows for reducing the ppi to make the image smaller without worrying about compression.