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September 13, 2005

Larry Spirgel

Assistant Director

Mail Stop 0407

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C.  20549

            Re:

            MDC Partners Inc.

Form 10-K for Fiscal Year Ended December 31, 2004 (the “2004 Form 10-K”)

Filed April 18, 2005

Form 10-Q for Fiscal Quarter Ended June 30, 2005

File No. 1-13178

Dear Mr. Spirgel:

Set forth below are the responses of MDC Partners Inc. (the “Company”) to the comments of the Staff of the Division of Corporation Finance, which were set forth in your letter dated August 12, 2005 (the “August 12 Letter”) regarding the Company’s above-referenced filings.  The responses to the Staff’s comments are provided in the order in which the comments were set out in the August 12 Letter and are numbered correspondingly.

The Staff’s comments, indicated by bold, are followed by responses on behalf of the Company.  Page references below are to the applicable Exchange Act filing, as the case may be.

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Mr. Larry Spirgel

Securities and Exchange Commission

September 13, 2005

Page 2 of 21

Form 10-K for Fiscal Year Ended December 31, 2004

Note 2 – Significant Accounting Policies, page 66

Goodwill and Indefinite Lived Intangibles, page 68

            1.

            We would like to arrange a conference call with you to discuss your response to comment 2.

                As requested during our conference call on August 23, 2005, the Company notes the following regarding the manner in which the Company tests for impairment of goodwill.

The Company confirms that each operating entity is an operating segment.  The Company further confirms that prospectively, the Company will test goodwill on an operating segment level.

In response to the Staff’s request, the Company is providing additional quantitative analysis (Appendix A and Appendix B) to support the Company’s presentation of reportable segments as set out in the Company’s financial statements in the 2004 Form 10-K.  Specifically, the Company has provided additional quantitative analysis for the MarCom Group to support the conclusion that the operating segments within the MarCom Group exhibit similar long-term financial performance characteristics.  The Company evaluates long-term financial performance based on gross margin and the relationship of costs of salary as a percentage of revenue.  These key performance indicators are used by management to both monitor and manage the operating segments.  The Company has provided this analysis on a five year historic period and a one year projection for 2005 as it believes that five years is
an appropriate period to assess long-term financial performance.

Based on the quantitative analysis contained in this submission, together with the Company’s analysis of the qualitative information provided in the Company’s June 14th and July 15th response letters, the Company believes that the criteria as set out in FAS 131 paragraph 17 have been met and therefore the Company may aggregate the operating segments in the MarCom group into one reportable segment.

The Company has also provided additional analysis related to the SPI Group that supports reporting the four operating segments as one reportable segment.

MarCom Group

The MarCom Group of companies consists of small to midsize businesses primarily located in North America.  Revenues are derived from short-term project assignments, and longer-term contracts or arrangements that contain an industry norm 90-day cancellation clause.  Each MarCom Group entity derives the majority of its revenue in any given year from its top ten customers.  The loss of a significant customer or the changing in their spending pattern could

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Mr. Larry Spirgel

Securities and Exchange Commission

September 13, 2005

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significantly impact revenue period over period.  Consequently, the businesses in the MarCom Group have a volatile revenue pattern indicative of the shorter-term project-driven business within which environment they operate.  Due to the volatility, management is required to manage its staff compliment on a short-term outlook basis.  This volatile revenue stream results in significant swings in profitability and staff costs to revenue from period to period for most of the operating segments; however, the operating segments have similar economic characteristics over the long-term.  Results of operations in any given year may vary significantly based on specific client and project wins and losses and shifts in client spending among periods, as well as the unavoidable lag in increasing and decreasing staffing resources necessary to match the revenue servicing requirements and to maintain profitability.
This pattern of similar long-term economic characteristics with periodic swings is evident in the attached exhibits.

Generally, the Company expects operating segments within the MarCom Group to have gross margins in the range of 30-40% and staff costs as a percentage of revenue in the range of 50-60% over the long-term. Management uses these key performance indicators in managing the operating segments within the MarCom group.  In many instances, management has taken decisive action to address entities that are not achieving these measures.  These actions include changing senior management at the operating entity, merging the operating entity with another operating segment within the MarCom group or assisting in implementing performance improvement initiatives.  Some of these activities have been highlighted in our analysis.

Gross Margins Analysis

As shown in the gross margin analysis exhibit, nearly all of the operating segments in the MarCom Group show historical margins in the 30-40% range with fluctuations in any given period attributable to the general factors set out above and those specific factors set out on the attached exhibit.

The following four business units have gross margins outside the 30-40% range however, as described below, the Company believes that they should be aggregated with the MarCom Group as, on balance, their long-term economic characteristics are similar with the MarCom Group.

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            KBP LLC (“KBP”) and Crispin Porter & Bogusky (“CPB”) – KBP is a New York based agency that has been recognized as one of the best regional agencies in the United States as evidenced by being named the 2004 “Regional Agency of the Year” in Ad Week. CPB, a Miami based agency, has been recognized as one of the best agencies in the US as evidenced by being named the 2004 “Agency of the Year” by Ad Age.  Their reputations for quality and innovative work have provided KBP and CPB with the opportunity to perform services at a more profitable level, resulting in a general overall higher gross margin. The Company believes that KBP and CPB meet the criteria of similar economic performance as their economic trends are effected by the same economic factors of the other agencies (i.e.

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Mr. Larry Spirgel

Securities and Exchange Commission

September 13, 2005

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volatility of revenue and managing of staff costs), KBP’s and CPB’s staff costs as a percentage of revenue are within the expected range of 50-60%.  In combination with the strength of the qualitative factors, previously provided to the Commission, the Company has aggregated these entities.

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            TargetCom - TargetCom is similar to other entities within the MarCom Group providing direct marketing services. TargetCom, however, provides a specific highly focused type of direct marketing which provides its customers with a measurable result.  Such specialized services enable TargetCom to obtain higher margins than other entities. Staff costs as a percent of revenue are within the expected overall cost structure range of 50-60%.  Economic factors, such as client spending on marketing communications, have a direct impact TargetCom as well as the other entities within the MarCom Group. Based on these facts and the strength of the qualitative factors, the Company has aggregated this entity within the MarCom Group.

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            Northstar Research Partners (“Northstar”) – Northstar is an agency with operations in the United States, Canada, and the United Kingdom. Northstar provides a significant amount of marketing communications related research, which requires the use of a significant amount of focus group services.  Northstar outsources the provisions of focus group services from third party providers.  Northstar provides these services to its customers as the primary obligor and not as agent, and therefore accounts for the outsourced service costs relating to focus group work on a gross basis as revenue and expenses.  Other agencies within the MarCom segment primarily engage outsourced services on an “agent” basis and therefore record the amounts net on the income statement.  As a result of this accounting difference, the gross margins for Northstar have consistently
been below the 30-40% range.  However, if these third party costs were excluded from Northstar’s revenues and cost of services in 2003 and 2004, the gross margin percentage would have been approximately 41%, which is comparable to the other businesses within the MarCom Group.  In addition, excluding these amounts from revenue would have increased the ratio of staff costs to revenue to approximately 61% for 2003 and 2004 which is more comparable to the 50%-60% range.  Given that the primary reason for the differences in the gross margin and salary costs as a percentage of revenue from the other MarCom entities is the result of the method in which Northstar contracts with its customers and not on differences in long-term economic characteristics, the Company believes that it is appropriate to aggregate Northstar within the MarCom reportable segment.

The Company has identified two operating segments that do not meet the similar long-term economic characteristics criteria.  However, both of these operating segments do not meet the quantitative tests under FAS 131 paragraph 18 to be disclosed separately.  The following set out the Company’s rational for aggregating them with the MarCom Group.

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            Computer Composition – Computer Compositions is a Canadian company engaged in information processing, database management, desktop publishing, text storage and typesetting activities.  Revenue in the 2003-2005 periods has ranged from $1.5-$2.0 million

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Mr. Larry Spirgel

Securities and Exchange Commission

September 13, 2005

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      per year. This business is servicing its last significant client until the services are no longer needed. No significant investments or expenditures have been made at this entity in the most recent years and none are expected in the future. We have aggregated Computer Composition with the MarCom group based on the similar qualitative factors previously provided and due to the immaterial size of the company and the fact that it would not impact the reportable segment results in any material way currently or in the future. To disclose it separately in  “all other” or with Corporate would not be more meaningful than the current disclosure.

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            Life Med Marketing (“Life Med”) – Life Med commenced operations in 2004.  Although the Company has less than a 50% interest in Life Med, the Company has consolidated the results of Life Med in 2004 based on VIE accounting.  Life Med was a start-up operation and had no revenue in 2004.  As a result of recent transactions, the Company believes that effective for the third quarter of 2005, this business unit will no longer be consolidated.  We have aggregated Life Med with the MarCom Group based on the similar qualitative factors and due to the immaterial size of Life Med and the fact that it would not impact the reportable segment results in any material way currently or in the future.  To disclose it separately in “all other” or with Corporate would not be more meaningful than the current disclosure.

Salary Costs as a Percentage of Revenues Analysis

The operating segments in the MarCom Group are in a services business with the primary cost of service being salary costs.  In order to be profitable and competitive, service businesses in the marketing and communications industry need to monitor and manage their staff costs.  Staff costs in the sector are generally impacted over the long-term by the same economic characteristics (inflation, business cycles) as well as industry characteristics (competition for resources, seasonality of business, spending on marketing and advertising).

Generally, salary costs as a percentage of revenue will fluctuate period over period as a result of several factors including the following:

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            As levels of agency revenues change (i.e., winning new work or losing a client) the agency must react to the change and either increase/decrease the staff compliment or increase revenue.  The decision making process often lags the change in revenue due to the lag of hiring new employees and the lag in terminating employees when decreases in revenue are assessed to be other than temporary.

      •
      One time charges for severance costs.

However, over the long-term, salary costs are expected to be in the range of 50-60% of revenue. As discussed above, where entities generally have been higher than this range the Company has taken steps to change the existing management teams and restructure the business to manage the salary costs to the acceptable range.

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Mr. Larry Spirgel

Securities and Exchange Commission

September 13, 2005

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As shown in the salary costs as a percentage of revenue exhibit, nearly all of the operating segments in the MarCom Group show historical costs in the 50-60% range with fluctuations in any given period attributable to the general factors set out above and those specific factors set out on the attached exhibit.

The following four business units have salary costs as a percentage of revenue  outside the 50-60% range however, as described below, the Company believes that they should be aggregated with the MarCom Group as, on balance, their other long-term economic characteristics are similar to the MarCom Group.

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            Accent – Accent provides marketing strategies services similar to other entities within the MarCom Group. These strategies include the design, development and implementation of direct marketing campaigns. Accent will often develop marketing plans that include the use of Accent’s call center facilities. Accent’s gross margins are within the 30-40% range; however, the staff costs as a percentage of revenue are lower than the expected range of 50-60%.  The staff costs as a percentage of revenue are lower as revenue includes charges for the call centre costs (such as communication charges), thus increasing total revenue dollars without a corresponding increase in salary costs thereby reducing the staff cost ratio. At the Company’s other business entities, the call center services are outsourced and either recorded net on the income statement as the
company acts as agent and not the primary obligor, or the end customer directly contracted for the call centre services.  The economic factors such as client spending on marketing communications has a direct impact on Accent as well as the other entities within the MarCom Group. As a result of the above, the consistency of the gross margins and the qualitative analysis, previously provided, the Company believes that aggregation of Accent is appropriate.

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      Northstar – See description contained above under “Gross Margin Analysis” as it also addresses the salary cost variance.

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            Source Marketing (“Source”) and Bryan Mills – Source is a corporate comm