Problem: JPEG files do not display when using the 'insert picture' option
When inserting a JPEG file into a layout in ArcMap, the image does not display.
This is caused by the compression of the JPEG file. ArcGIS does not work with 'Progressive' JPEG compression. JPEG files with this compression type do not display in ArcMap.
Solution or Workaround
Open the JPEG in a third-party graphics application and save to a new file or new format without the option for 'Progressive' compression.