I've been in both venues - the standard "talent contest" with all of its headaches and heartaches, and the change in my denomination to a "Fine Arts Festival", which had the more relaxed atmosphere of a festival (especially at the local level, where all comers could enter, and for free), and way more categories -- not just music, but painting, sculpture and other visual arts, as well as preaching and essays (verbal/language arts). Contestants received "ratings" and commentary from the judges, much like the solo/ensemble festivals in the public schools, and an emphasis was placed on encouragement and meaningful commentary from the judges, not just "oh, that was thrilling!".
I myself was involved with adult choir as a "youth", and thus was never in contests or youth-oriented things. I would have relished the chanced to be in a Fine Arts festival. As an adult I was a judge and accompanist, variously. The strangest experience was meeting a singer who was in the state finals, but had no accompanist, planning to sing "The Holy City" (Jerusalem, Jerusalemmmmm...) I volunteered, scratching out a transposition, and he won & we went to regionals in Denver, a hair-raising experience, roaming a huge airport with a guy from Samoa who cared absolutely zero for clocks and schedules.
I presume you're a leader, working with teenagers. If so, Fine Arts is a fabulous opportunity to get youngsters to actually focus on a high-level musical goal, and to learn to meet, know and love the "competition" (something all will need to do as they mature into adults), and gain a wider view of what constitutes worshiping God through artistic beauty and creativity.