The bank said that although there were tentative signs of a global advertising recovery, it would take longer for ad firms to see a rebound.
"We would expect advertising agencies to lag any global advertising recovery by at least six months, given their high exposure to fee-based revenues," the research note said.
Shares in WPP dropped by 3.89%, or 18.5p, to trade at 457p.
UBS Warburg also downgraded shares in Havas from a "hold" to a "reduce" over the same fears, in addition to the fact that it judged Havas's client portfolio to be riskier and said that the French company had limited cost-cutting potential.
The only ad firm to receive more positive news was Publicis Groupe, which UBS Warburg said had above-average potential for margin growth. However, it was still downgraded, from a "buy" to a "hold".
There have been mixed predictions for the timing of the advertising recovery, with Publicis chairman and CEO Maurice Levy saying on Tuesday that although there were signs of improvement, a war against Iraq could hit consumer confidence.
Shares in Havas were down 3.25% at €4.17, while Publicis was down 2.2% at €22.26, against overall declines on the world's stock markets.
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