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In this video, the tutorial demonstrates how to reduce the size of an Excel file without compromising data. The first step is to compress picture sizes within the Excel file by selecting the picture, going to picture format, and clicking on compress under adjust. Different options are available for compressing picture formats. An alternative method is to always have pictures automatically compressed by going to file, then options, advanced, and selecting discard editing data and not compressing image files. This allows for reducing the ppi to make pictures smaller without manual compression.