When you click Compress Pictures on the Picture toolbar, you see the dialog box shown on the left.
Note the area in the middle of the dialog box called Change resolution. Use this when you don't need every single pixel in the current image to get an acceptable version of it for your slide show or Web presentation or your printed output. This can be effective with images you've scaled to be smaller, as their "dots per inch" actually increase in that case.
Changing the resolution can affect image quality. Before saving your file, look at your images in Slide Show mode after reducing the resolution. If you're not happy with the reduced resolution, select that picture in normal view, and use the Reset Picture button on the Picture toolbar to restore the original resolution.
Reduce color format
Depending on how many colors are used in the image, sometimes its color format can be reduced to make its file size smaller. The Compress pictures option (within the Compress Pictures dialog box) does this, making color take up fewer bits per pixel. There's no loss in quality.