Cost per lead is marketing spend divided by the number of enquiries it produced.
What it does not tell you
Whether the money was well spent. A cheap lead that never becomes work costs more than an expensive one that does.
The figure that completes it is cost per acquired customer, which is cost per lead divided by close rate. A channel producing leads at half the price but closing at a third of the rate is the more expensive channel.
Comparing channels
Cost per lead is most useful across channels rather than as a single number, because it exposes where the next unit of spend is best placed.
That comparison depends on knowing which channel produced which enquiry, which is attribution, and it is the part most often estimated rather than measured.
Weighing it against value
A lead is worth paying for up to the profit it eventually produces, not the revenue of its first job. A trade where customers return for years can afford a far higher cost per lead than one where they do not — see customer lifetime value.
Where it sits
Cost per lead is the front of the funnel. Return on ad spend is the back of it. Both are needed, because improving one at the expense of the other is easy to do by accident.