Blurring reduces noise/entropy so that JPEG compresses better. You can use a bilateral filter (Photoshop: Surface Blur; GIMP: Selective Gaussian Blur) for larger amount of smoothing while preserving edges.
Image Posterization
This is actually called image quantization. pngquant[1] and pngnq[2] are two specialized open-source tools for automatically selecting the best palettes to represent the image with least perceptual error.
Selective JPEG Compression
JPEGmini[3] automatically selects areas of interest with custom perceptual metrics and preserves quality within those areas while optimizing out other areas. I tested the sample image in the article: JPEGmini obtained 6.7% decrease in size without manually selecting the mask.
[1]: http://pngquant.org/
[2]: http://pngnq.sourceforge.net/
[3]: http://www.jpegmini.com/main/shrink_photo https://news.ycombinator.com/item?id=2940505