Aalborg, Denmark
External Finance: Sponsorships (10%), public funding (5%), loans
Internal Finance: Sales of loyalty bracelet (60%), revenue from bars and stalls (20%)
Values: Social and economic
Key takeaways of this inspiring case: Though Aalborg Karneval is a popular festival organized since 1983, it was not until recently that they have worked on a sustainable business model. Studying and communicating festival’s core values helped shifting the main revenue from ordinary ticket sales to loyalty sales. When public funding was decreasing, securing relationships with the private sponsors for longer term has gained importance. Taking a loan has helped bridging the immediate funding gap that occurred when the festival was transitioning to a new business model.
Communicating your values is important for your individual donors: For a long time, the financial model of the festival was heavily dependent on the ticket sales revenue. The festival had a very loyal audience, who was not acquainted with the organization’s financial model and thus didn't realize the significance of their support. The festival began to communicate its values and switched to the loyal bracelet sales instead of regular ticket sales. While ticket sales were taking place just before the festival, it was possible to sell the loyal bracelets for a period of six months in a year. The loyalty bracelet embodied the spirit of carnival and made the audience see it as an act of solidarity rather than an event ticket.
Financing mix can provide a certain flexibility for your organization: As public funding decreased from 25% to 5%, financial balance was secured with the sponsors, which comprises 10% of the income gained importance. To balance this situation, longer term agreements were made with the key partners. With the addition of a loan, it was possible to bridge the gap until they could establish the new loyalty sales model, the revenue of which increased remarkably.
Data can strengthen your financial decision-making process: Aalborg, in its transition period benefited from the available data (audience feedback, booking data, sales data, ongoing evaluation) extensively while making financial decisions. This way, they were able to identify which of their activities are profitable and which of them needs to be subsidised with other revenue generating activities. The innovation in the Karnival’s business model paved the way for being a recognised brand, which in turn generated new revenue streams such as giving consultancy for other large events.
Sources:
https://creativelenses.eu/wp-content/uploads/2018/11/Creative-Lenses-Aalborg-Carnival.pdf
