This gel colour is suitable for fondant and modelling pastes, buttercream, royal icing, glazes and batters. That means you can easily match your fondant covering to your buttercream decorations without hunting for two separate colours that happen to coordinate.
Add it to batter before baking. According to the manufacturer, the colour is stable when baked, so the shade should stay vivid even after baking. For red shades, it's worth starting with a pale batter, one without cocoa, for example. Darker ingredients will affect the final colour, and the red may not come through as vividly as you'd like.